SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: November 6, 1995
INTERNATIONAL PAPER COMPANY
(Exact Name of Registrant as Specified in Charter)
NEW YORK 1-3157 13-0872805
(State or Other (Commission (IRS Employer
Jurisdiction File Number) Identification
of Incorporation) No.)
TWO MANHATTANVILLE ROAD, PURCHASE, N.Y. 10577
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 914-397-1500
Not Applicable.
(Former Name or Former Address, if Changed Since Last Report)
ITEM 5. OTHER EVENTS.
On November 6, 1995, International Paper Company
("Registrant") and Federal Paper Board Company, Inc. ("FPB")
entered into an Agreement and Plan of Merger ("Merger
Agreement"), providing for a merger ("Merger") pursuant to
which, and subject to the terms thereof, FPB would become a
wholly owned subsidiary of the Registrant. As of the
effective time of the Merger, each outstanding share of FPB's
common stock, ("FPB Shares"), other than shares as to which
dissenters' rights may have been properly exercised, shares
held in the Treasury of FPB or by any of its subsidiaries and
shares owned by the Registrant or any of its subsidiaries, shall
be converted into, at the election of the holder thereof, the
right to receive one of the following (or a combination of
both as determined under the Merger Agreement): (i) the
number of shares of Registrant's Common Stock ("Registrant
Common Stock"), determined by dividing $55.00 by an average
of the last sales price of Registrant Common Stock on the New
York Stock Exchange, Inc. Composite Tape for the 20 consecutive
trading days ending on the trading day which is five days prior to
the closing of the Merger, subject to the limitation that not more
than 1.612 and not less than 1.275 shares of the Registrant Common
Stock will be issued; and (ii) $55 in cash. The election to
receive cash or Registrant Common Stock will be subject to
adjustment so that approximately 49% of the FPB Shares will
be exchanged for cash, and 51% will be exchanged for shares
of Registrant Common Stock. The Merger is intended to
qualify as a tax-free reorganization.
The foregoing description of the Merger Agreement
does not purport to be complete and is qualified in its
entirety by reference to the Merger Agreement, a copy of
which is attached hereto as Exhibit 2.1 and is hereby
incorporated by reference in its entirety. A copy of the joint
press release, dated November 6, 1995, relating to the above-
described transactions is attached hereto as Exhibit 99.1.
ITEM 7: FINANCIAL STATEMENT, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
2.1 Agreement and Plan of Merger, dated as of
November 6, 1995, among International Paper Company, Focus
Merger Co., Inc., and Federal Paper Board Company, Inc.
99.1 Joint Press Release issued by International
Paper Company and Federal Paper Board Company, Inc.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned hereunto
duly authorized.
INTERNATIONAL PAPER COMPANY
By: /s/ Syvert E. Nerheim
Name: Syvert E. Nerheim
Title: Assistant Secretary
Date: November 13, 1995
EXHIBIT INDEX
2.1 Agreement and Plan of Merger, dated as of November
6, 1995, among International Paper Company, Focus
Merger Co., Inc., and Federal Paper Board Company,
Inc.
99.1 Joint Press Release issued by International Paper
Company and Federal Paper Board Company, Inc.
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
Among
INTERNATIONAL PAPER COMPANY,
FOCUS MERGER CO., INC.
and
FEDERAL PAPER BOARD COMPANY, INC.
Dated as of November 6, 1995
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
SECTION 1.01. The Merger . . . . . . . . . . . . . 2
SECTION 1.02. Closing . . . . . . . . . . . . . . 2
SECTION 1.03. Effective Time . . . . . . . . . . . 2
SECTION 1.04. Effects of the Merger . . . . . . . 2
SECTION 1.05. Articles of Incorporation and By-Laws
of the Surviving Corporation . . . 2
SECTION 1.06. Directors . . . . . . . . . . . . . 3
SECTION 1.07. Officers . . . . . . . . . . . . . . 3
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.01. Capital Stock of Merger Sub . . . . 3
SECTION 2.02. Cancellation of Treasury Stock and
Parent Owned Stock . . . . . . . . 3
SECTION 2.03. Conversion of Company Common Stock . 4
SECTION 2.04. Shares of Dissenting Shareholders . 8
SECTION 2.05. Exchange of Certificates . . . . . . 8
SECTION 2.06. Stock Transfer Books . . . . . . . . 11
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01. Organization . . . . . . . . . . . . 12
SECTION 3.02. Capitalization . . . . . . . . . . . 13
SECTION 3.03. Authority . . . . . . . . . . . . . 13
SECTION 3.04. Noncontravention; Filings and
Consents . . . . . . . . . . . . . 14
SECTION 3.05. Company SEC Documents; Financial
Statements . . . . . . . . . . . . 15
SECTION 3.06. Information Supplied . . . . . . . . 15
SECTION 3.07. Absence of Certain Changes or Events 16
SECTION 3.08. Litigation . . . . . . . . . . . . . 16
SECTION 3.09. Absence of Changes in Benefit Plans 17
SECTION 3.10. Employee Benefits; ERISA . . . . . . 17
SECTION 3.11. Taxes. . . . . . . . . . . . . . . . 19
SECTION 3.12. Compliance with Applicable Laws . . 19
SECTION 3.13. Environmental Matters . . . . . . . 20
SECTION 3.14. Title to Properties . . . . . . . . 22
SECTION 3.15. Trademarks, Etc. . . . . . . . . . . 22
SECTION 3.16. Insurance . . . . . . . . . . . . . 23
SECTION 3.17. Reorganization . . . . . . . . . . . 23
SECTION 3.18. Voting Requirements . . . . . . . . 23
SECTION 3.19. Opinions of Financial Advisors . . . 23
SECTION 3.20. Brokers . . . . . . . . . . . . . . 23
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
SECTION 4.01. Organization . . . . . . . . . . . . 24
SECTION 4.02. Capitalization . . . . . . . . . . . 24
SECTION 4.03. Authority . . . . . . . . . . . . . 25
SECTION 4.04. Noncontravention; Filings and
Consents . . . . . . . . . . . . . 25
SECTION 4.05. Parent SEC Documents; Financial
Statements . . . . . . . . . . . . 26
SECTION 4.06. Information Supplied . . . . . . . . 27
SECTION 4.07. Absence of Certain Changes or Events 27
SECTION 4.08. Litigation . . . . . . . . . . . . . 28
SECTION 4.09. Environmental Matters . . . . . . . 28
SECTION 4.10. Reorganization . . . . . . . . . . . 28
SECTION 4.11. Ownership of Company Capital Stock . 28
SECTION 4.12. Interim Operations of Merger Sub. . 28
SECTION 4.13. Brokers . . . . . . . . . . . . . . 28
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 5.01. Conduct of Business of the Company . 29
SECTION 5.02. Conduct of Business of Parent. . . . 31
SECTION 5.03. Other Actions . . . . . . . . . . . 32
SECTION 5.04. No Solicitation . . . . . . . . . . 32
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Company Shareholders' Meeting . . . 34
SECTION 6.02. Registration Statement; Proxy
Statement . . . . . . . . . . . . 34
SECTION 6.03. Access to Information; Con-
fidentiality . . . . . . . . . . . 35
SECTION 6.04. Approvals and Consents; Cooperation 36
SECTION 6.05. Company Stock Options . . . . . . . 37
SECTION 6.06. Company Benefit Plans . . . . . . . 39
SECTION 6.07. Indemnification and Insurance . . . 40
SECTION 6.08. Redemption of Convertible Preferred
Stock . . . . . . . . . . . . . . 41
SECTION 6.09. Fees and Expenses . . . . . . . . . 42
SECTION 6.10. Notification . . . . . . . . . . . . 42
SECTION 6.11. Obligations of Merger Sub . . . . . 43
SECTION 6.12. Affiliates' Letters . . . . . . . . 43
SECTION 6.13. Plan of Reorganization . . . . . . . 43
SECTION 6.14. Public Announcements . . . . . . . . 43
SECTION 6.15. Letters of Accountants . . . . . . . 43
SECTION 6.16. Stock Exchange Listing . . . . . . . 44
SECTION 6.17. Parent Board of Directors . . . . . 44
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to the Obligations of Each
Party . . . . . . . . . . . . . . 44
SECTION 7.02. Conditions to the Obligations of
Parent and Merger Sub . . . . . . 45
SECTION 7.03. Conditions to the Obligations of the
Company . . . . . . . . . . . . . 46
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination . . . . . . . . . . . . 47
SECTION 8.02. Effect of Termination . . . . . . . 48
SECTION 8.03. Amendment . . . . . . . . . . . . . 49
SECTION 8.04. Extension; Waiver . . . . . . . . . 49
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Nonsurvival of Representations . . . 49
SECTION 9.02. Notices . . . . . . . . . . . . . . 49
SECTION 9.03. Definitions . . . . . . . . . . . . 50
SECTION 9.04. Interpretation . . . . . . . . . . . 51
SECTION 9.05. Counterparts . . . . . . . . . . . . 51
SECTION 9.06. Entire Agreement; No Third-Party
Beneficiaries . . . . . . . . . . 52
SECTION 9.07. Assignment . . . . . . . . . . . . . 52
SECTION 9.08. Governing Law . . . . . . . . . . . 52
SECTION 9.09. Enforcement . . . . . . . . . . . . 52
EXHIBIT A Form of Affiliate Letter for Affiliates of the
Company
EXHIBIT B Form of Company Tax Opinion Representation Letter
EXHIBIT C Form of Parent Tax Opinion Representation Letter
AGREEMENT AND PLAN OF MERGER dated as of November 6,
1995 among International Paper Company, a New York corporation
("Parent"), Focus Merger Co., Inc., a North Carolina corporation
and a wholly owned subsidiary of Parent ("Merger Sub"), and
Federal Paper Board Company, Inc., a North Carolina corporation
(the "Company").
W I T N E S S E T H :
WHEREAS, the respective Boards of Directors of Parent,
Merger Sub and the Company have approved the acquisition of the
Company by Parent upon the terms and subject to the conditions
set forth in this Agreement and Plan of Merger, including,
without limitation, the exhibits attached hereto (collectively,
this "Agreement");
WHEREAS, the respective Boards of Directors of Parent,
Merger Sub and the Company have approved the merger of the
Company with and into Merger Sub as set forth below (the
"Merger") upon the terms and subject to the conditions set forth
in this Agreement, whereby each issued and outstanding share of
common stock, par value $5.00 per share, of the Company ("Company
Common Stock"), other than shares owned directly or indirectly by
Parent or by the Company and other than Dissenting Shares (as
defined in Section 2.04), will be converted into the right to
receive shares of common stock, par value $1.00 per share, of
Parent ("Parent Common Stock") or cash or a combination thereof
subject to the provisions of Article II of this Agreement;
WHEREAS, for federal income tax purposes, the Merger is
intended to qualify as a reorganization under the provisions of
Section 368(a) of the United States Internal Revenue Code of
1986, as amended (the "Code"); and
WHEREAS, Parent, Merger Sub and the Company desire to
make certain representations, warranties, covenants and
agreements in connection with the Merger and also to prescribe
certain conditions to the Merger;
NOW, THEREFORE, in consideration of the foregoing and
the mutual covenants and agreements herein contained, and
intending to be legally bound hereby, Parent, Merger Sub and the
Company hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject
to the conditions set forth in this Agreement, and in accordance
with the North Carolina Business Corporation Act (the "NCBCA"),
the Company shall be merged with and into Merger Sub at the
Effective Time of the Merger (as defined in Section 1.03).
Following the Merger, the separate corporate existence of the
Company shall cease, and Merger Sub shall continue as the
surviving corporation (the "Surviving Corporation") and shall
succeed to and assume all the rights and obligations of the
Company in accordance with the NCBCA. At the election of Parent
prior to the effective date of the Registration Statement (as
defined in Section 6.02), any direct or indirect wholly owned
subsidiary of Parent may be substituted for Merger Sub as a
constituent corporation in the Merger, provided that no such
substitution shall be made if it would materially delay or impede
the Merger or any of the other transactions contemplated by this
Agreement. In such event, the parties agree to execute an
appropriate amendment to this Agreement in order to reflect the
foregoing.
SECTION 1.02. Closing. The closing of the Merger
shall take place at 10:00 a.m. on a date to be specified by the
parties which shall be no later than the second business day
after the satisfaction or waiver of the conditions set forth in
Article VII (the "Closing Date") at the offices of Shearman &
Sterling, 599 Lexington Avenue, New York, New York 10022, unless
another date or place is agreed to in writing by the parties
hereto.
SECTION 1.03. Effective Time. On the Closing Date, or
as soon as practicable thereafter, the parties shall file
articles of merger or other appropriate documents (in any such
case, the "Articles of Merger") executed in accordance with the
relevant provisions of the NCBCA and shall make all other filings
or recordings required under the NCBCA. The Merger shall become
effective at such time as the Articles of Merger are duly filed
with the North Carolina Secretary of State, or at such later time
as is agreed upon by the parties and specified in the Articles of
Merger (such time as the Merger becomes effective is referred to
herein as the "Effective Time").
SECTION 1.04. Effects of the Merger. The Merger shall
have the effects set forth in Section 55-11-06 of the NCBCA.
SECTION 1.05. Articles of Incorporation and By-Laws of
the Surviving Corporation. (a) Subject to the provisions of
Section 6.07(a), the Articles of Incorporation of Merger Sub as
in effect immediately prior to the Effective Time shall become
the Articles of Incorporation of the Surviving Corporation after
the Effective Time (except that Article I of the Articles of
Incorporation shall be amended as of the Effective Time to read
as follows: "The name of the Corporation is Federal Paper Board
Company, Inc."), and thereafter may be amended as provided
therein and as permitted by law and this Agreement.
(b) Subject to the provisions of Section 6.07(a), the
By-Laws of Merger Sub as in effect immediately prior to the
Effective Time shall become the By-Laws of the Surviving
Corporation after the Effective Time, and thereafter may be
amended as provided therein and as permitted by law and this
Agreement.
SECTION 1.06. Directors. The directors of Merger Sub
immediately prior to the Effective Time shall become the
directors of the Surviving Corporation, until the earlier of
their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
SECTION 1.07. Officers. The officers of the Company
immediately prior to the Effective Time shall become the officers
of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.01. Capital Stock of Merger Sub. As of the
Effective Time, by virtue of the Merger and without any action on
the part of the holder of any shares of Company Common Stock or
any shares of capital stock of Merger Sub, each share of common
stock, without par value, of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into
and become one fully paid and nonassessable share of common stock,
without par value, of the Surviving Corporation.
SECTION 2.02. Cancellation of Treasury Stock and
Parent Owned Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any
shares of Company Common Stock or any shares of capital stock of
Merger Sub, each share of Company Common Stock issued and held
immediately prior to the Effective Time in the Company's treasury
or by any of the Company's direct or indirect wholly owned
subsidiaries and each share of Company Common Stock that is owned
by Parent, Merger Sub or any other subsidiary of Parent shall
automatically be cancelled and retired and shall cease to exist,
and no consideration shall be delivered in exchange therefor.
SECTION 2.03. Conversion of Company Common Stock. (a)
As of the Effective Time, by virtue of the Merger and without any
action on the part of the holder of any shares of Company Common
Stock or any shares of capital stock of Merger Sub, except as
otherwise provided in this Section 2.03 and subject to Sections
2.04 and 2.05(f), each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other than
shares to be cancelled in accordance with Section 2.02) shall be
converted into, at the election of the holder thereof, one of the
following (or a combination of shares of Parent Common Stock and
cash determined in accordance with Sections 2.03(d), (e), (f) and
(g)) (the "Merger Consideration"):
(i) the right to receive the number of shares of
Parent Common Stock determined by dividing $55.00 by the
Average Parent Share Price and rounding the result to the
nearest one thousandth of a share (the "Stock
Consideration"); provided, however, that in no event shall
the Stock Consideration be less than 1.275 or more than
1.612 shares of Parent Common Stock; provided, further,
that, in any event, if between the date of this Agreement
and the Effective Time the outstanding shares of Parent
Common Stock shall have been changed into a different number
of shares or a different class, by reason of any stock
dividend, subdivision, reclassification, recapitalization,
split, combination or exchange of shares, the Stock
Consideration shall be correspondingly adjusted to the
extent appropriate to reflect such stock dividend,
subdivision, reclassification, recapitalization, split,
combination or exchange of shares. The "Average Parent
Share Price" means the average of the last sales prices per
share of Parent Common Stock on the New York Stock Exchange,
Inc. (the "Stock Exchange") Composite Tape for the 20
consecutive trading days ending on the trading day which is
five days prior to the Closing Date; or
(ii) the right to receive in cash from Parent, without
interest, an amount equal to $55.00 (the "Cash
Consideration").
As of the Effective Time, all such shares of Company Common Stock
shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist, and each holder
of a certificate representing any such shares of Company Common
Stock shall cease to have any rights with respect thereto, except
the right to receive the Merger Consideration.
(b) Elections. Subject to the election and allocation
procedures set forth in this Section 2.03, each holder of record
of Company Common Stock as of the record date for the Company
Shareholders' Meeting (as defined in Section 6.01) will be
entitled, with respect to each share of Company Common Stock held
by such holder, to (i) elect to receive the Stock Consideration
(a "Stock Election"), or (ii) elect to receive the Cash
Consideration (a "Cash Election"), or (iii) indicate that such
holder has no preference as to the receipt of the Stock
Consideration or the Cash Consideration (a "Non-Election").
(c) Election Numbers. The number of shares of Company
Common Stock to be converted into the right to receive the Cash
Consideration in the Merger shall be equal to (A) 49% of the
number of shares of Company Common Stock outstanding immediately
prior to the Effective Time less (B) the aggregate number of
shares of Company Common Stock as to which a notice of dissent
has been timely and properly filed pursuant to Section 55-13-21
of the NCBCA and not withdrawn as of the Election Deadline (as
defined in Section 2.03(i)) (the "Cash Election Number"). The
number of shares of Company Common Stock to be converted into the
right to receive the Stock Consideration in the Merger (the
"Stock Election Number") shall be equal to 51% of the number of
shares of Company Common Stock outstanding immediately prior to
the Effective Time.
(d) Cash Election Adjustments. If the aggregate
number of shares of Company Common Stock covered by Cash
Elections (the "Cash Election Shares") exceeds the Cash Election
Number, all shares of Company Common Stock covered by Stock
Elections (the "Stock Election Shares") and all shares of Company
Common Stock covered by Non-Elections (the "Non-Election Shares")
shall be converted into the right to receive the Stock
Consideration, and the Cash Election Shares shall be converted
into the right to receive Parent Common Stock and cash in the
following manner:
each Cash Election Share shall be converted into the
right to receive (i) an amount in cash, without
interest, equal to the product of (x) the Cash
Consideration and (y) a fraction (the "Cash Fraction"),
the numerator of which shall be the Cash Election
Number and the denominator of which shall be the total
number of Cash Election Shares, and (ii) a number of
shares of Parent Common Stock equal to the product of
(x) the Stock Consideration and (y) a fraction equal to
one minus the Cash Fraction.
(e) Stock Election Adjustments. If the aggregate
number of Stock Election Shares exceeds the Stock Election
Number, all Cash Election Shares and all Non-Election Shares
shall be converted into the right to receive the Cash
Consideration, and the Stock Election Shares shall be converted
into the right to receive Parent Common Stock and cash in the
following manner:
each Stock Election Share shall be converted into the
right to receive (i) a number of shares of Parent
Common Stock equal to the product of (x) the Stock
Consideration and (y) a fraction (the "Stock
Fraction"), the numerator of which shall be the Stock
Election Number and the denominator of which shall be
the total number of Stock Election Shares, and (ii) an
amount in cash, without interest, equal to the product
of (x) the Cash Consideration and (y) a fraction equal
to one minus the Stock Fraction.
(f) Non-Election Adjustments. In the event that
neither Section 2.03(d) nor 2.03(e) above is applicable, all Cash
Election Shares shall be converted into the right to receive the
Cash Consideration, all Stock Election Shares shall be converted
into the right to receive the Stock Consideration, and the Non-
Election Shares, if any, shall be converted into the right to
receive Parent Common Stock and cash in the following manner:
each Non-Election Share shall be converted into the
right to receive (i) an amount in cash, without
interest, equal to the product of (x) the Cash
Consideration and (y) a fraction (the "Non-Election
Fraction"), the numerator of which shall be the excess
of (A) the Cash Election Number over (B) the total
number of Cash Election Shares and the denominator of
which shall be the excess of (C) the number of shares
of Company Common Stock outstanding immediately prior
to the Effective Time (other than Dissenting Shares)
over (D) the sum of the total number of Cash Election
Shares and Stock Election Shares and (ii) a number of
shares of Parent Common Stock equal to the product of
(x) the Stock Consideration and (y) a fraction equal to
one minus the Non-Election Fraction.
(g) Adjustments Relating to Tax Opinions. If either
(i) the tax opinion of Shearman & Sterling referred to in Section
7.03(c) cannot be rendered (as reasonably determined by Shearman
& Sterling and concurred in by Skadden, Arps, Slate, Meagher &
Flom) or (ii) the tax opinion of Skadden, Arps, Slate, Meagher &
Flom referred to Section 7.02(d) cannot be rendered (as
reasonably determined by Skadden, Arps, Slate, Meagher & Flom and
concurred in by Shearman & Sterling), in either case as a result
of the Merger potentially failing to satisfy continuity of
interest requirements under applicable federal income tax
principles relating to reorganizations under Section 368(a) of
the Code, then Parent shall reduce to the minimum extent
necessary to enable the relevant tax opinion or opinions, as the
case may be, to be rendered, the Cash Election Number and
correspondingly increase the Stock Election Number. The
requirement to issue additional shares of Parent Common Stock
pursuant to the foregoing sentence shall not be applicable in the
event Parent would be required thereunder to issue in the
aggregate (including upon the exercise of Substitute Options (as
defined in Section 6.05)) more than 50 million shares of Parent
Common Stock (with such number of shares being correspondingly
adjusted to reflect the occurrence of any of the events set forth
in the second proviso of Section 2.03(a)(i)).
(h) Exercise of Election. All Cash Elections, Stock
Elections and Non-Elections shall be made on a form designed for
that purpose and mutually acceptable to the Company and Parent (a
"Form of Election") and mailed to holders of record of shares of
Company Common Stock as of the record date for the Company
Shareholders' Meeting or such other date as Parent and the
Company shall mutually agree (the "Election Form Record Date").
Parent and the Company shall make available one or more Election
Forms as may be reasonably requested by all persons who become
holders (or beneficial owners) of Company Common Stock between
the Election Form Record Date and the close of business on the
day prior to the Election Deadline. Elections shall be made by
holders of Company Common Stock by mailing to the Exchange Agent
(as defined in Section 2.05) a Form of Election. To be
effective, a Form of Election must be properly completed, signed
and submitted to the Exchange Agent and accompanied by the
Certificates (as defined in Section 2.05(b)) representing the
shares of Company Common Stock as to which the election is being
made (or an appropriate guarantee of delivery by an appropriate
trust company in the United States or a member of a registered
national securities exchange or the National Association of
Securities Dealers, Inc.). Parent will have the discretion,
which it may delegate in whole or in part to the Exchange Agent,
to reasonably determine whether Forms of Election have been
properly completed, signed and submitted or revoked and to
disregard immaterial defects in Forms of Election. The decision
of Parent (or the Exchange Agent) in such matters shall be
conclusive and binding. Neither Parent nor the Exchange Agent
will be under any obligation to notify any person of any defect
in a Form of Election submitted to the Exchange Agent. The
Exchange Agent shall also make all computations contemplated by
this Section 2.03 and all such computations shall be conclusive
and binding on the holders of Company Common Stock.
(i) Election Deadline. A Form of Election must be
received by the Exchange Agent by the close of business on the
last business day prior to the Closing Date (the "Election
Deadline") in order to be effective. Any holder of Company
Common Stock who has made an election by submitting a Form of
Election to the Exchange Agent may at any time prior to the
Election Deadline change such holder's election by submitting a
revised Form of Election, properly completed and signed that is
received by the Exchange Agent prior to the Election Deadline.
Any holder of Company Common Stock may at any time prior to the
Election Deadline revoke his election and withdraw his
Certificates deposited with the Exchange Agent by written notice
to the Exchange Agent received by the close of business on the
day prior to the Election Deadline. As soon as practicable after
the Election Deadline, the Exchange Agent shall determine the
allocation of the cash portion of the Merger Consideration and
the stock portion of the Merger Consideration and shall notify
Parent of its determination. Promptly after such notification,
Parent shall issue a press release announcing in reasonable
detail the results of the Exchange Agent's allocation of the
Merger Consideration.
(j) Deemed Non-Election. For the purposes hereof, a
holder of Company Common Stock who does not submit a Form of
Election which is received by the Exchange Agent prior to the
Election Deadline shall be deemed to have made a Non-Election.
If Parent or the Exchange Agent shall determine that any
purported Cash Election or Stock Election was not properly made,
such purported Cash Election or Stock Election shall be deemed to
be of no force and effect and the shareholder making such
purported Cash Election or Stock Election shall for purposes
hereof, be deemed to have made a Non-Election.
SECTION 2.04. Shares of Dissenting Shareholders.
Notwithstanding anything in this Agreement to the contrary, any
shares of Company Common Stock that are issued and outstanding as
of the Effective Time and that are held by a shareholder who has
exercised his right (to the extent such right is available by
law) to demand and to receive the fair value of such shares (the
"Dissenting Shares") under Article 13 of the NCBCA shall not be
converted into the right to receive the Merger Consideration
unless and until the holder shall have failed to perfect, or
shall have effectively withdrawn or lost, his right to dissent
from the Merger under the NCBCA and to receive such consideration
as may be determined to be due with respect to such Dissenting
Shares pursuant to and subject to the requirements of Article 13
of the NCBCA. If any such holder shall have so failed to perfect
or have effectively withdrawn or lost such right, each share of
such holder's Company Common Stock shall thereupon be deemed to
have been converted into and to have become, as of the Effective
Time, the right to receive, without any interest thereon, the
Stock Consideration or the Cash Consideration or a combination
thereof as determined by Parent in its sole discretion. The
Company shall give Parent (i) prompt notice of any notice or
demands for appraisal or payment for shares of Company Common
Stock received by the Company and (ii) the opportunity to
participate in and direct all negotiations and proceedings with
respect to any such demands or notices. The Company shall not,
without the prior written consent of Parent, make any payment
with respect to, or settle, offer to settle or otherwise
negotiate, any such demands.
SECTION 2.05. Exchange of Certificates. (a)
Exchange Agent. From and after the Effective Time, (i) Parent
shall make available to a bank or trust company designated by
Parent and reasonably satisfactory to the Company (the "Exchange
Agent"), for the benefit of the holders of shares of Company
Common Stock (other than Dissenting Shares), for exchange in
accordance with this Article II through the Exchange Agent, (i)
certificates evidencing such number of shares of Parent Common
Stock issuable to holders of Company Common Stock in the Merger
pursuant to Section 2.03 and (ii) cash in the amount required to
be exchanged for shares of Company Common Stock in the Merger
pursuant to Section 2.03 (such certificates for shares of Parent
Common Stock, together with any dividends or distributions with
respect thereto and cash, being hereinafter referred to as the
"Exchange Fund"). The Exchange Agent shall, pursuant to
irrevocable instructions, deliver the cash and the Parent Common
Stock contemplated to be issued pursuant to Section 2.03 out of
the Exchange Fund. Except as contemplated by Section 2.05(g)
hereof, the Exchange Fund shall not be used for any other
purpose.
(b) Exchange Procedures. As promptly as practicable
after the Effective Time, Parent shall cause the Exchange Agent
to mail to each holder of a certificate or certificates (to the
extent such certificates have not already been submitted to the
Exchange Agent with Forms of Election) which immediately prior to
the Effective Time represented outstanding shares (other than
Dissenting Shares) of Company Common Stock (the "Certificates")
(i) a letter of transmittal (which shall be in customary form and
shall specify that delivery shall be effected, and risk of loss
and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Exchange Agent) and
(ii) instructions for use in effecting the surrender of the
Certificates in exchange for certificates evidencing shares of
Parent Common Stock or cash.
(c) Exchange of Certificates. Upon surrender to the
Exchange Agent of a Certificate for cancellation, together with
such letter of transmittal, duly executed and completed in
accordance with the instructions thereto, and such other
documents as may be reasonably required pursuant to such
instructions, the holder of such Certificate shall be entitled to
receive in exchange therefor (A) a Certificate representing that
number of whole shares of Parent Common Stock, if any, which such
holder has the right to receive pursuant to this Article II and
(B) a check in the amount equal to the cash, if any, which such
holder has the right to receive pursuant to the provisions of
this Article II (including any cash in lieu of any fractional
shares of Parent Common Stock to which such holder is entitled
pursuant to Section 2.05(f) and any dividends or other
distributions to which such holder is entitled pursuant to
Section 2.05(d)), and the Certificate so surrendered shall
forthwith be cancelled. In the event of a transfer of ownership
of shares of Company Common Stock which is not registered in the
transfer records of the Company, the applicable Merger
Consideration, cash in lieu of any fractional shares of Parent
Common Stock to which such holder is entitled pursuant to Section
2.05(f) and any dividends or other distributions to which such
holder is entitled pursuant to Section 2.05(d) may be issued to a
transferee if the Certificate representing such shares of Company
Common Stock is presented to the Exchange Agent, accompanied by
all documents required to evidence and effect such transfer and
by evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this Section 2.05,
each Certificate shall be deemed at all times after the Effective
Time to represent only the right to receive upon such surrender
the applicable Merger Consideration with respect to the shares of
Company Common Stock formerly represented thereby, cash in lieu
of any fractional shares of Parent Common Stock to which such
holder is entitled pursuant to Section 2.05(f) and any dividends
or other distributions to which such holder is entitled pursuant
to Section 2.05(d).
(d) Distributions with Respect to Unexchanged Shares
of Parent Common Stock. No dividends or other distributions
declared or made after the Effective Time with respect to Parent
Common Stock with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Certificate with respect
to the shares of Parent Common Stock represented thereby, and no
cash payment in lieu of any fractional shares shall be paid to
any such holder pursuant to Section 2.05(f), until the holder of
such Certificate shall surrender such Certificate. Subject to
the effect of escheat, tax or other applicable laws, following
surrender of any such Certificate, there shall be paid to the
holder of the certificates representing whole shares of Parent
Common Stock issued in exchange therefor, without interest,
(i) promptly, the amount of any cash payable with respect to a
fractional share of Parent Common Stock to which such holder is
entitled pursuant to Section 2.05(f) and the amount of dividends
or other distributions with a record date after the Effective
Time and theretofore paid with respect to such whole shares of
Parent Common Stock, and (ii) at the appropriate payment date,
the amount of dividends or other distributions, with a record
date after the Effective Time but prior to surrender and a
payment date occurring after surrender, payable with respect to
such whole shares of Parent Common Stock.
(e) No Further Rights in Company Common Stock. All
shares of Parent Common Stock issued or cash paid upon conversion
of the shares of Company Common Stock in accordance with the
terms hereof (including any cash paid pursuant to Section 2.05(d)
or (f)) shall be deemed to have been issued in full satisfaction
of all rights pertaining to such shares of Company Common Stock.
(f) No Fractional Shares. No certificates or scrip
representing fractional shares of Parent Common Stock shall be
issued upon the surrender for exchange of Certificates, and such
fractional share interests will not entitle the owner thereof to
vote or to any other rights of a shareholder of Parent. Each
holder of a fractional share interest shall be paid an amount in
cash equal to the product obtained by multiplying (i) such
fractional share interest to which such holder (after taking into
account all fractional share interests then held by such holder)
would otherwise be entitled by (ii) the Average Parent Share
Price. As promptly as practicable after the determination of the
amount of cash, if any, to be paid to holders of fractional share
interests, the Exchange Agent shall so notify Parent, and Parent
shall deposit such amount with the Exchange Agent and shall cause
the Exchange Agent to forward payments to such holders of
fractional share interests subject to and in accordance with the
terms of Sections 2.05(b), (c) and (d).
(g) Termination of Exchange Fund. Any portion of the
Exchange Fund (including any shares of Parent Common Stock) which
remains undistributed to the holders of Company Common Stock for
one year after the Effective Time shall be delivered to Parent,
upon demand, and any holders of Company Common Stock who have not
theretofore complied with this Article II shall thereafter look
only to Parent for the applicable Merger Consideration, any cash
in lieu of fractional shares of Parent Common Stock to which they
are entitled pursuant to Section 2.05(f) and any dividends or
other distributions with respect to the Parent Common Stock to
which they are entitled pursuant to Section 2.05(d). Any portion
of the Exchange Fund remaining unclaimed by holders of shares of
Company Common Stock as of a date which is immediately prior to
such time as such amounts would otherwise escheat to or become
property of any government entity shall, to the extent permitted
by applicable law, become the property of Parent free and clear
of any claims or interest of any person previously entitled
thereto.
(h) No Liability. None of the Exchange Agent, Parent
nor the Surviving Corporation shall be liable to any holder of
shares of Company Common Stock for any such shares of Parent
Common Stock (or dividends or distributions with respect
thereto), or cash delivered to a public official pursuant to any
abandoned property, escheat or similar law.
(i) Withholding Rights. Each of the Surviving
Corporation and Parent shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this
Agreement to any holder of shares of Company Common Stock such
amounts as it is required to deduct and withhold with respect to
the making of such payment under the Code, or any provision of
state, local or foreign tax law. To the extent that amounts are
so withheld by the Surviving Corporation or Parent, as the case
may be, such withheld amounts shall be treated for all purposes
of this Agreement as having been paid to the holder of the shares
of Company Common Stock in respect of which such deduction and
withholding was made by the Surviving Corporation or Parent, as
the case may be.
(j) Lost Certificates. If any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and, if required by the Surviving
Corporation, the posting by such person of a bond, in such
reasonable amount as the Surviving Corporation may direct, as
indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Certificate the
applicable Merger Consideration, any cash in lieu of fractional
shares of Parent Common Stock to which the holders thereof are
entitled pursuant to Section 2.05(f) and any dividends or other
distributions to which the holders thereof are entitled pursuant
to this Agreement.
(k) Further Assurances. If, at any time after the
Effective Time, the Surviving Corporation shall consider or be
advised that any deeds, bills of sale, assignments, assurances or
any other actions or things are necessary or desirable to vest,
perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of
the rights, properties or assets of either of the Merger Sub or
the Company acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger or
otherwise to carry out this Agreement, the officers of the
Surviving Corporation shall be authorized to execute and deliver,
in the name and on behalf of each of the Merger Sub and the
Company or otherwise, all such deeds, bills of sale, assignments
and assurances and to take and do, in such names and on such
behalves or otherwise, all such other actions and things as may
be necessary or desirable to vest, perfect or confirm any and all
right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to
carry out the purposes of this Agreement.
SECTION 2.06. Stock Transfer Books. At the Effective
Time, the stock transfer books of the Company shall be closed and
there shall be no further registration of transfers of shares of
Company Common Stock thereafter on the records of the Company.
From and after the Effective Time, the holders of certificates
representing shares of Company Common Stock outstanding
immediately prior to the Effective Time shall cease to have any
rights with respect to such shares of Company Common Stock,
except as otherwise provided herein or by law. On or after the
Effective Time, any Certificates presented to the Exchange Agent
or Parent for any reason shall be converted into shares of Parent
Common Stock, any cash in lieu of fractional shares of Parent
Common Stock to which the holders thereof are entitled pursuant
to Section 2.05(f) and any dividends or other distributions to
which the holders thereof are entitled pursuant to
Section 2.05(d).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent
and Merger Sub as follows:
SECTION 3.01. Organization. Each of the Company and
its Significant Subsidiaries (as defined below) is a corporation
duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority and all necessary
government approvals to own, lease and operate its properties and
to carry on its business as now being conducted, except where the
failure to be so organized, existing and in good standing or to
have such power, authority and governmental approvals would not
have a material adverse effect. For purposes of this Agreement,
a "Significant Subsidiary" means any subsidiary of the Company or
Parent, as the case may be, that constitutes a significant
subsidiary within the meaning of Rule 1-02 of Regulation S-X of
the Securities and Exchange Commission (the "SEC"). The Company
and each of its subsidiaries is duly qualified or licensed to do
business and in good standing in each jurisdiction in which the
property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified or
licensed and in good standing would not have a material adverse
effect. The Company has made available to Parent complete and
correct copies of its Articles of Incorporation, as amended, and
By-Laws and the articles of incorporation and by-laws or other
comparable charter or organizational documents of its Significant
Subsidiaries, in each case as amended to the date of this
Agreement. The list of subsidiaries of the Company set forth in
Schedule 3.01 of the separate disclosure schedule delivered by
the Company to Parent prior to the execution of this Agreement
(the "Company Disclosure Schedule") is a true and accurate list
of all the subsidiaries of the Company. All the outstanding
shares of capital stock of each Significant Subsidiary of the
Company are owned by the Company or by another wholly owned
subsidiary of the Company, free and clear of all liens, and are
duly authorized, validly issued, fully paid and nonassessable.
SECTION 3.02. Capitalization. The authorized capital
stock of the Company consists of 240,000,000 shares of Company
Common Stock, 1,900,000 shares of Convertible Preferred Stock and
10,000,000 shares of Class A Preferred Stock, par value $1.00 per
share, of the Company ("Class A Preferred Stock"). As of October
7, 1995, (i) 47,248,878 shares of Company Common Stock, 48,635
shares of Convertible Preferred Stock and no shares of Class A
Preferred Stock were issued and outstanding, (ii) 2,693,071
shares of Company Common Stock were reserved for issuance upon
exercise of outstanding Company Stock Options (as defined in
Section 6.05), (iii) 243,661 shares of Company Common Stock were
reserved for issuance upon conversion of the Convertible
Preferred Stock and (iv) 66,171 shares of Company Common Stock
were held in the treasury of the Company. All the outstanding
shares of Company Common Stock are, and all shares which may be
issued pursuant to the Company Stock Options and the Convertible
Preferred Stock will be, when issued in accordance with the
respective terms thereof, duly authorized, validly issued, fully
paid and nonassessable and free of any pre-emptive rights in
respect thereof. As of the date hereof, no bonds, debentures,
notes or other indebtedness of the Company convertible into
voting securities of the Company are issued or outstanding and,
except as set forth above, (i) no shares of capital stock or
other voting securities of the Company are outstanding, (ii) no
equity equivalents, interests in the ownership or earnings of the
Company or other similar rights are outstanding and (iii) there
are no existing options, warrants, calls, subscriptions or other
rights or agreements or commitments relating to the capital stock
of the Company or any of its subsidiaries or obligating the
Company or any of its subsidiaries to issue, transfer or sell any
shares of capital stock, or other equity interest in, the Company
or any of its subsidiaries or obligating the Company or any of
its subsidiaries to grant, extend or enter into any such option,
warrant, call, subscription or other right, agreement or
commitment. As of the date of this Agreement, except as
contemplated by Section 6.08, there are no outstanding
contractual obligations of the Company or any of its subsidiaries
to repurchase, redeem or otherwise acquire any shares of capital
stock of the Company or any of its subsidiaries.
SECTION 3.03. Authority. The Company has the
requisite corporate power and authority to execute and deliver
this Agreement and, subject to the requisite approval of this
Agreement by the holders of the outstanding shares of Company
Common Stock and Convertible Preferred Stock, voting together as
one class, to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by the Company and
the consummation by the Company of the transactions contemplated
hereby have been duly authorized by all necessary corporate
action on the part of the Company, subject to the requisite
approval of this Agreement by the holders of the outstanding
shares of Company Common Stock and Convertible Preferred Stock,
voting together as one class. This Agreement has been duly
executed and delivered by the Company and, assuming this
Agreement constitutes the valid and binding obligation of Parent
and Merger Sub, constitutes the valid and binding obligation of
the Company, enforceable against the Company in accordance with
its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws, now or hereafter in effect,
affecting creditors' rights and remedies and to general
principles of equity.
SECTION 3.04. Noncontravention; Filings and Consents.
(a) Except as set forth in Schedule 3.04 of the Company
Disclosure Schedule, the execution and delivery of this Agreement
by the Company do not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions
of this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination,
cancellation, or acceleration of any obligation or to loss of a
material benefit under, or result in the creation of any lien
upon any of the properties or assets of the Company or any of its
subsidiaries under (i) the Articles of Incorporation, as amended,
or By-Laws of the Company or the comparable charter or
organizational documents of any of its Significant Subsidiaries,
(ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to the Company or any
of its Significant Subsidiaries or their respective properties or
assets or (iii) subject to the governmental filings and other
matters referred to in paragraph (b) below, any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to
the Company or any of its subsidiaries or their respective
properties or assets, other than, in the case of clauses (ii) and
(iii), any such conflicts, violations, defaults, rights or liens
that individually or in the aggregate would not (x) impair in any
material respect the ability of the Company to perform its
obligations under this Agreement or (y) prevent or impede, in any
material respect, the consummation of the transactions
contemplated by this Agreement.
(b) No consent, approval, order or authorization of,
or registration, declaration or filing with, any federal, state
or local government or any court, administrative or regulatory
agency or commission or other governmental authority or agency,
domestic or foreign (a "Governmental Entity"), is required by the
Company or any of its subsidiaries in connection with the
execution and delivery of this Agreement by the Company or the
consummation by the Company of the transactions contemplated by
this Agreement, except for (i) the filing of a premerger
notification and report form by the Company under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (ii) the filing of a notification with the European
Commission under Council Regulation (EEC) No. 4064/89
("Regulation 4064/89"), (iii) the filing with the SEC of (x) the
Proxy Statement (as defined in Section 6.02) and (y) such reports
under Section 13(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as may be required in connection
with this Agreement and the transactions contemplated by this
Agreement, (iv) the filing of the Articles of Merger with the
North Carolina Secretary of State and appropriate documents with
the relevant authorities of other states in which the Company is
qualified to do business, (v) the filing of such notices and
other reports as may be required to comply with the Connecticut
Transfer Act ("CTA"), (vi) such as may be required by any
applicable state securities or "blue sky" laws and (vii) such
other consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or
made would not, individually or in the aggregate, (x) impair in
any material respect the ability of the Company to perform its
obligations under this Agreement or (y) prevent or impede, in any
material respect, the consummation of the transactions
contemplated by this Agreement.
SECTION 3.05. Company SEC Documents; Financial
Statements. The Company has filed all required reports, proxy
statements, forms, and other documents with the SEC since
December 31, 1993 and prior to the date of this Agreement (the
"Company SEC Documents"). As of their respective dates, (i) the
Company SEC Documents complied, and all similar documents filed
prior to the Closing Date will comply, in all material respects
with the requirements of the Securities Act of 1933, as amended
(the "Securities Act") or the Exchange Act, as the case may be,
and the rules and regulations of the SEC promulgated thereunder
applicable to such Company SEC Documents and (ii) none of the
Company SEC Documents contained, nor will any similar document
filed after the date of this Agreement contain, any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the
Company included in the Company SEC Documents (including any
similar documents filed after the date of this Agreement) comply
as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC
with respect thereto have been prepared in accordance with
generally accepted accounting principles (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis during the periods involved (except
as may be indicated in the notes thereto) and fairly present the
consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments). Except as set forth in
Schedule 3.05 of the Company Disclosure Schedule and except as
set forth in the Company SEC Documents, and except for
liabilities and obligations incurred in the ordinary course of
business consistent with past practice since the date of the most
recent consolidated balance sheet included in the Company SEC
Documents, neither the Company nor any of its subsidiaries has
any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by generally accepted
accounting principles to be set forth on a consolidated balance
sheet of the Company and its consolidated subsidiaries or in the
notes thereto and which, individually or in the aggregate, would
reasonably be expected to have a material adverse effect.
SECTION 3.06. Information Supplied. None of the
information to be supplied by the Company expressly for inclusion
or incorporation by reference in the Registration Statement and
the Proxy Statement will, (i) on the date the Proxy Statement is
first mailed to the shareholders of the Company and Parent, (ii)
at the time the Registration Statement becomes effective and
(iii) at the time of the Company Shareholders' Meeting (as
defined in Section 6.01), contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made,
not misleading, except that no representation or warranty is made
by the Company with respect to statements made or incorporated by
reference therein based on information supplied by Parent or
Merger Sub specifically for inclusion or incorporation by
reference therein. The Proxy Statement will comply as to form in
all material respects with the requirements of the Exchange Act
and the rules and regulations thereunder.
SECTION 3.07. Absence of Certain Changes or Events.
Except as disclosed in the Company SEC Documents or as set forth
in Schedule 3.07 of the Company Disclosure Schedule or as
contemplated by this Agreement, since September 9, 1995, the
Company and its subsidiaries have conducted their respective
businesses only in the ordinary course, and there has not been
(i) any material adverse change in the Company, (ii) any
declaration, setting aside or payment of any dividend or other
distribution with respect to the Company's capital stock other
than the regular quarterly dividends on the shares of Company
Common Stock, Convertible Preferred Stock and Class A Preferred
Stock, (iii) any split, combination or reclassification of any of
the Company's capital stock or any issuance or the authorization
of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock, (iv) (A) any
granting by the Company or any of its subsidiaries to any officer
of the Company or any of its subsidiaries of any increase in
compensation, except in the ordinary course of business
consistent with prior practice, (B) any granting by the Company
or any of its subsidiaries to any such officer of any increase in
severance or termination pay, except as part of a standard
employment package to any person promoted or hired, (C) except
termination arrangements in the ordinary course of business
consistent with past practice with employees other than any
executive officer of the Company, any entry by the Company or any
of its subsidiaries into any employment, severance or termination
agreement with any such officer, or (D) any material
modifications to any existing Company Benefit Plans (as defined
in Section 3.10) other than such modifications required by law,
(v) any damage, destruction or loss, whether or not covered by
insurance, that has or reasonably would be expected to have a
material adverse effect on the Company or (vi) any change in
accounting methods, principles or practices by the Company
materially affecting its assets, liabilities or business, except
insofar as may have been required by a change in generally
accepted accounting principles.
SECTION 3.08. Litigation. Except as disclosed in the
Company SEC Documents or as set forth in Schedule 3.08 of the
Company Disclosure Schedule, there are no suits, actions or
proceedings pending or, to the knowledge of the Company,
threatened against the Company or any of its subsidiaries that
would reasonably be expected, individually or in the aggregate,
to have a material adverse effect. Except as disclosed in the
Company SEC Documents, neither the Company nor any of its
subsidiaries is subject to any outstanding order, writ,
injunction or decree that would reasonably be expected to have a
material adverse effect.
SECTION 3.09. Absence of Changes in Benefit Plans.
Except as disclosed in Schedule 3.09 of the Company Disclosure
Schedule, since December 31, 1994 there has not been any adoption
or amendment in any material respect by the Company or any of its
subsidiaries of any collective bargaining agreement or any bonus,
pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option,
retirement, severance, disability, death benefit,
hospitalization, medical or other plan, arrangement or
understanding providing benefits to any current or former
employee, officer or director of the Company or any of its
subsidiaries. Except as disclosed in Schedule 3.09 of the
Company Disclosure Schedule, there exist no employment,
consulting, severance, termination or indemnification agreements,
arrangements or understandings between the Company or any of its
subsidiaries and any current or former employee, officer or
director of the Company or any of its subsidiaries, and there is
no oral or written understanding or arrangement to enter into any
such agreement with any such individual.
SECTION 3.10. Employee Benefits; ERISA. (a) Schedule
3.10 of the Company Disclosure Schedule contains a list of all
"employee pension benefit plans" (as defined in Section 3(2) of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) (sometimes referred to herein as "Company Pension
Plans"), "employee welfare benefit plans" (as defined in Section
3(1) of ERISA) (sometimes referred to herein as "Welfare Plans"),
and each other plan, arrangement or policy (written or oral)
relating to stock options, stock purchases, compensation,
deferred compensation, severance, fringe benefits or other
employee benefits, in each case maintained, or contributed to, by
the Company or any of its subsidiaries or any other person or
entity that, together with the Company is treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code (each,
together with the Company, a "Commonly Controlled Entity"), for
the benefit of any current or former employees, officers, agents
or directors of the Company or any of its subsidiaries (all of
the foregoing being herein called "Company Benefit Plans"). The
Company has made available to Parent true and complete copies of
(w) each Company Benefit Plan (or, in the case of any unwritten
Company Benefit Plans, descriptions thereof), (x) the most recent
annual report on Form 5500 filed with the Internal Revenue
Service with respect to each Company Benefit Plan (if any such
report was required), (y) the most recent summary plan
description (or similar document) for each Company Benefit Plan
for which a summary plan description is required or was otherwise
provided to plan participants or beneficiaries and (z) each trust
agreement and group annuity contract relating to any Company
Benefit Plan.
(b) Except as disclosed in Schedule 3.10 of the
Company Disclosure Schedule, all Company Pension Plans and
related trusts that are intended to be tax-qualified plans have
been the subject of determination letters from the Internal
Revenue Service to the effect that such Company Pension Plans and
related trusts are qualified and exempt from federal income taxes
under Sections 401(a) and 501(a), respectively, of the Code, and
no such determination letter has been revoked nor, to the
knowledge of the Company, has revocation been threatened; no
event has occurred and no circumstances exist that would
adversely affect the tax qualification of such Company Pension
Plan nor has any such Company Pension Plan been amended since the
date of its most recent determination letter or application
therefor in any respect that would adversely affect its
qualification or materially increase its costs or require
security under Section 302 of ERISA.
(c) Each Company Benefit Plan has been administered in
all material respects in accordance with its terms. The Company
Benefit Plans are, and have been administered, in compliance in
all material respects with the applicable provisions of ERISA,
the Code, and all other applicable laws. There are no
investigations by any governmental agency, termination
proceedings or other claims (except claims for benefits payable
in the normal operation of the Company Benefit Plans), suits or
proceedings against or involving any Company Benefit Plan or
asserting any rights to or claims for benefits under any Company
Benefit Plan that could give rise to any material liability, and
there are not any facts that would reasonably be expected to give
rise to any material liability in the event of any such
investigation, claim, suit or proceeding.
(d) No Commonly Controlled Entity is required to
contribute to any "multiemployer plan" as defined in Section
4001(a)(3) of ERISA or has withdrawn from any such multiemployer
plan where such withdrawal has resulted or would result in any
material "withdrawal liability" (within the meaning of Section
4201 of ERISA) that has not been fully paid. None of the
Company, any of its subsidiaries, any officer of the Company or
any of its subsidiaries or any of the Company Benefit Plans which
are subject to ERISA, including the Company Pension Plans, any
trusts created thereunder or any trustee or administrator
thereof, has engaged in a "prohibited transaction" (as such term
is defined in Section 406 of ERISA or Section 4975 of the Code)
or any other breach of fiduciary responsibility that could
subject the Company, any of its subsidiaries or any officer of
the Company or any of its subsidiaries to any material tax or
penalty on prohibited transactions imposed by such Section 4975
or to any material liability under Section 502(i) or (l) of
ERISA. Neither any of such Company Benefit Plans nor any of such
trusts has been terminated, nor has there been any "reportable
event" (as that term is defined in Section 4043 of ERISA) with
respect thereto, during the last five years.
(e) Except as set forth in Schedule 3.10 of the
Company Disclosure Schedule, no employee of the Company or any of
its subsidiaries will be entitled to any severance benefits or
any other additional benefits or any acceleration of the time of
payment or vesting of any benefits under any Company Benefit Plan
as a result of the transactions contemplated by this Agreement.
(f) No liability under Title IV of ERISA has been
incurred by the Company or any Commonly Controlled Entity that
has not been satisfied in full, and no condition exists that
presents a material risk to the Company or any Commonly
Controlled Entity of incurring a liability under such Title,
other than liability for premiums due the Pension Benefit
Guaranty Corporation ("PBGC") (which premiums have been paid when
due). To the extent this representation applies to sections
4064, 4069 or 4204 of Title IV of ERISA, it is made not only with
respect to each Company Pension Plan but also with respect to any
employee benefit plan, program, agreement or arrangement subject
to Title IV of ERISA to which the Company or any Commonly
Controlled Entity made, or was required to make, contributions
during the five (5)-year period ending on the Closing Date. No
Company Pension Plan or any trust established thereunder has
incurred any "accumulated funding deficiency" (as defined in
section 302 of ERISA and section 412 of the Code), whether or not
waived, as of the last day of the most recent fiscal year of each
Company Pension Plan ended prior to the Closing Date; and all
contributions required to be made with respect thereto (whether
pursuant to the terms of any Company Pension Plan or otherwise)
on or prior to the Closing Date have been timely made.
(g) The Tait U.K. Pension Scheme has been administered
in all material respects in accordance with applicable law, all
contributions required to be made thereto on or prior to the
Effective Time have been or will be timely made, and such Scheme
has been funded in accordance with local law and practice.
SECTION 3.11. Taxes. Each of the Company and each of
its subsidiaries has filed all tax returns and reports required
to be filed by it and has paid (or the Company has paid on its
behalf) all taxes required to be paid by it, and the most recent
financial statements contained in the Company SEC Documents
reflect an adequate reserve for all taxes payable by the Company
and its subsidiaries for all taxable periods and portions thereof
through the date of such financial statements. No deficiencies
for any taxes have been proposed, asserted or assessed against
the Company or any of its subsidiaries, and no requests for
waivers of the time to assess any such taxes are pending. The
federal income tax returns of the Company and each of its
subsidiaries consolidated in such returns have been examined by
and settled with the United States Internal Revenue Service for
all years through 1992. As used in this Agreement, "taxes" shall
include all federal, state, local and foreign income, property,
sales, excise and other taxes, tariffs or governmental charges of
any nature whatsoever.
SECTION 3.12. Compliance with Applicable Laws. Except
as disclosed in the Company SEC Documents or as set forth in
Schedule 3.12 of the Company Disclosure Schedule, to the
knowledge of the Company, since January 1, 1993 neither the
Company nor any of its subsidiaries has violated or failed to
comply with any statute, law, regulation, rule, judgment, decree
or order of any Governmental Entity applicable to its business or
operations, except for violations and failures to comply that
would not, individually or in the aggregate, reasonably be
expected to result in a material adverse effect. The conduct of
the business of the Company and its subsidiaries is in conformity
with all federal, state and local governmental and regulatory
requirements applicable to its business and operations, except
where such nonconformities would not, in the aggregate,
reasonably be expected to result in a material adverse effect.
The Company and its subsidiaries have all permits, licenses and
franchises from governmental agencies required to conduct their
businesses as now being conducted, except for such permits,
licenses and franchises the absence of which would not, in the
aggregate, reasonably be expected to result in a material adverse
effect.
SECTION 3.13. Environmental Matters. Except as
disclosed in the Company SEC Documents or as set forth in
Schedule 3.13 of the Company Disclosure Schedule and except as
would not, individually or in the aggregate, reasonably be
expected to result in a material adverse effect:
(a) To the knowledge of the Company, (i) the Company
and its subsidiaries are in compliance with all applicable
Environmental Laws and (ii) the Company and its subsidiaries
hold all Environmental Permits necessary for their
operations and properties and are in compliance with the
terms and conditions of all such Environmental Permits.
(b) To the knowledge of the Company, there is no
written claim, demand, notice or complaint alleging
violation of, or liability under, any Environmental Laws
pending or threatened against the Company and its
subsidiaries, or against any person or entity whose
liability for any such claim, demand, notice or complaint
the Company or any of its subsidiaries has retained or
assumed either contractually or by operation of law.
(c) The Company and its subsidiaries have not received
any written request for information relating to, or been
notified that any of them is a potentially responsible party
under, CERCLA or any similar state, local or foreign law.
(d) The Company has not entered into or agreed to any
consent decree or order, and is not subject to any judgment,
decree or judicial order, relating to compliance with
Environmental Laws or Environmental Permits or the
investigation, sampling, monitoring, treatment, remediation,
removal or cleanup of Hazardous Materials, and, to the
knowledge of the Company, no investigation, litigation or
other proceeding is pending or threatened with respect
thereto.
(e) None of the properties of the Company or its
subsidiaries is listed or, to the knowledge of the Company,
proposed for listing, on the "National Priorities List"
under CERCLA, as updated through the date hereof, or any
similar state list of sites requiring investigation or
cleanup.
(f) To the knowledge of the Company, Hazardous
Materials have not been released, discharged or disposed of
on any of the properties owned or occupied by the Company or
its subsidiaries in any manner or quantity which requires
investigation, assessment, monitoring, remediation or
cleanup under currently applicable Environmental Laws.
(g) The Company has made available to Parent copies of
all environmental audits, assessments or studies completed
since January 1, 1993 within its possession with respect to
the facilities or real property currently owned, leased or
operated by the Company or any subsidiary.
(h) To the knowledge of the Company, there are no past
or present actions, activities, circumstances, conditions,
events or incidents (including, without limitation, the
release, emission, discharge, presence or disposal of any
Hazardous Materials) which could reasonably be expected to
form the basis of any claim, demand, notice or complaint
alleging violation of, or liability under, any Environmental
Laws against the Company and its subsidiaries, or against a
person or entity whose liability for any such claim, demand,
notice or complaint the Company or any of its subsidiaries
has retained or assumed either contractually or by operation
of law.
(i) For purposes of this Agreement:
"CERCLA" means the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as
amended as of the date hereof.
"Environmental Laws" means any federal, state,
local or foreign statute, law, ordinance, regulation,
rule, code or order and any enforceable judicial or
administrative interpretation thereof, including any
judicial or administrative order, consent decree or
judgment, relating to pollution or protection of
industrial hygiene or of the environment or natural
resources, including, without limitation, those
relating to the use, handling, transportation,
treatment, storage, disposal, release or discharge of
Hazardous Materials, in effect as of the date hereof.
"Environmental Permits" means any permit,
approval, identification number, license or other
authorization required of the Company or its
subsidiaries, or Parent or its subsidiaries, as the
case may be, under any applicable Environmental Law.
"Hazardous Materials" means (a) any petroleum,
petroleum products, by products or breakdown products,
radioactive materials, asbestos-containing materials or
polychlorinated biphenyls or (b) any chemical, material
or substance defined or regulated as toxic or hazardous
or as a pollutant or contaminant or waste under any
applicable Environmental Law.
SECTION 3.14. Title to Properties. (a) Except as
disclosed in the Company SEC Documents or as set forth in
Schedule 3.14 of the Company Disclosure Schedule, each of the
Company and each of its subsidiaries has good and marketable
title to, or valid leasehold interests in, all its properties and
assets except for such as are no longer used or useful in the
conduct of its businesses or as have been disposed of in the
ordinary course of business and except for defects in title,
easements, restrictive covenants and similar encumbrances or
impediments that, in the aggregate, do not materially interfere
with its ability to conduct its business as currently conducted.
All such assets and properties, other than assets and properties
in which the Company or any of its subsidiaries has leasehold
interests, are free and clear of all liens other than those set
forth in Schedule 3.14 of the Company Disclosure Schedule and
except for liens that, in the aggregate, do not and will not
materially interfere with the ability of the Company and its
subsidiaries to conduct their businesses as currently conducted.
(b) Except as disclosed in the Company SEC Documents
or as set forth in Schedule 3.14 of the Company Disclosure
Schedule, each of the Company and its subsidiaries has complied
in all material respects with the terms of all material leases to
which it is a party and under which it is in occupancy, and all
such leases are in full force and effect. Each of the Company
and its subsidiaries enjoys peaceful and undisturbed possession
under all such material leases.
SECTION 3.15. Trademarks, Etc. The material patents,
trademarks (registered or unregistered), trade names, service
marks and copyrights and applications therefor owned by or
licensed to the Company and its subsidiaries (collectively,
"Intellectual Property Rights") are sufficient to allow each of
the Company and each of its Significant Subsidiaries to conduct,
and to continue to conduct, its business as currently conducted
in all material respects. To the knowledge of the Company, each
of the Company and each of its Significant Subsidiaries owns or
has sufficient unrestricted right to use the Intellectual
Property Rights in order to allow it to conduct, and to continue
to conduct, its business as currently conducted in all material
respects, and the consummation of the transactions contemplated
hereby will not alter or impair such ability in any respect.
Except as set forth in Schedule 3.15 of the Company Disclosure
Schedule, to the knowledge of the Company, neither the Company
nor any of its Significant Subsidiaries has received any written
notice from any other person pertaining to or challenging the
right of the Company or any of its Significant Subsidiaries to
use any of the Intellectual Property Rights. To the knowledge of
the Company, no claims are pending by any person with respect to
the ownership, validity, enforceability or use of any such
Intellectual Property Rights challenging or questioning the
validity or effectiveness of any of the foregoing. Except as set
forth in Schedule 3.15 of the Company Disclosure Schedule, to the
knowledge of the Company, neither the Company nor any of its
Significant Subsidiaries has made any claim of a violation or
infringement by others of its rights to or in connection with the
Intellectual Property Rights.
SECTION 3.16. Insurance. To the knowledge of the
Company, the Company and its Significant Subsidiaries have
obtained and maintained in full force and effect insurance with
responsible and reputable insurance companies or associations in
such amounts, on such terms and covering such risks, including
fire and other risks insured against by extended coverage, as is
reasonably prudent, and each has maintained in full force and
effect public liability insurance, insurance against claims for
personal injury or death or property damage occurring in
connection with the activities of the Company or its Significant
Subsidiaries or any properties owned, occupied or controlled by
the Company or its Significant Subsidiaries, in such amount as
reasonably deemed necessary by the Company or its Significant
Subsidiaries.
SECTION 3.17. Reorganization. To the knowledge of the
Company, neither it nor any of its subsidiaries has taken any
action or failed to take any action which action or failure would
jeopardize the qualification of the Merger as a reorganization
within the meaning of Section 368(a) of the Code.
SECTION 3.18. Voting Requirements. The affirmative
vote of the holders of a majority of the outstanding shares of
Company Common Stock and Convertible Preferred Stock, voting
together as one class, entitled to vote approving this Agreement
is the only vote of the holders of any class of the Company's
capital stock necessary to approve this Agreement and the
transactions contemplated by this Agreement.
SECTION 3.19. Opinions of Financial Advisors. The
Company has received (a) an opinion from J.P. Morgan Securities
Inc. to the effect that, as of the date of this Agreement, the
consideration to be received in the Merger by the holders of
Company Common Stock is fair to the holders of Company Common
Stock from a financial point of view and (b) an opinion from
Goldman, Sachs & Co., to the effect that, as of the date of this
Agreement, the consideration to be received in the Merger by the
holders of Company Common Stock is fair to the holders of Company
Common Stock.
SECTION 3.20. Brokers. No broker, investment banker,
financial advisor or other person, other than J.P. Morgan
Securities Inc. and Goldman, Sachs & Co., the fees and expenses
of which will be paid by the Company, is entitled to any
broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of
the Company. The Company has provided Parent true and correct
copies of the agreements between the Company and each of J.P.
Morgan Securities Inc. and Goldman, Sachs & Co.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby jointly and severally
represent and warrant to the Company as follows:
SECTION 4.01. Organization. Each of Parent and Merger
Sub and Parent's Significant Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite
corporate power and authority and all necessary government
approvals to own, lease and operate its properties and to carry
on its business as now being conducted, except where the failure
to be so organized, existing and in good standing or to have such
power, authority and governmental approvals would not have a
material adverse effect. Each of Parent and Merger Sub and each
of Parent's subsidiaries is duly qualified or licensed to do
business and in good standing in each jurisdiction in which the
property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified or
licensed and in good standing would not have a material adverse
effect. Each of Parent and Merger Sub has made available to the
Company complete and correct copies of its respective Articles of
Incorporation and By-Laws and the articles of incorporation and
by-laws or other comparable charter or organizational documents
of Parent's Significant Subsidiaries, in each case as amended to
the date of this Agreement. The list of subsidiaries of Parent
filed by Parent with its most recent Report on Form 10-K is on
the date of this Agreement a true and accurate list of all the
subsidiaries which are required to be set forth therein. Merger
Sub has no subsidiaries.
SECTION 4.02. Capitalization. (a) The authorized
capital stock of Parent consists of 400,000,000 shares of Parent
Common Stock, 8,750,000 shares of Serial Preferred, par value
$1.00 per share (the "Serial Preferred Stock"), and 400,000
shares of Cumulative $4 Preferred Stock, without par value (the
"$4 Preferred"). As of September 30, 1995, (i) 260,824,389
shares of Parent Common Stock, no shares of the Serial Preferred
Stock and 15,780 shares of the $4 Preferred were issued and
outstanding. As of July 31, 1995, (i) 8,679,116 shares of Parent
Common Stock were reserved for issuance upon exercise of
outstanding options ("Parent Stock Options"), and (ii) 9,000,000
shares of Parent Common Stock were reserved for issuance upon the
conversion of outstanding Trust Issued Tax Deductible Convertible
Preferred (the "Trust Preferred"). All the outstanding shares of
Parent Common Stock are, and all shares which may be issued
pursuant to Parent Stock Options and the Trust Preferred will be,
when issued in accordance with the respective terms thereof, duly
authorized, validly issued, fully paid and nonassessable and free
of any pre-emptive rights in respect thereof. As of the date
hereof, no bonds, debentures, notes or other indebtedness of
Parent convertible into voting securities of Parent are issued or
outstanding and, except as set forth above, (i) no shares of
capital stock or other voting securities of Parent are
outstanding, (ii) no equity equivalents, interests in the
ownership or earnings of Parent or other similar rights are
outstanding and (iii) there are no existing options, warrants,
calls, subscriptions or other rights or agreements or commitments
relating to the capital stock of Parent or obligating Parent or
any of its subsidiaries to issue, transfer or sell any shares of
capital stock, or other equity interest in, Parent or obligating
Parent or any of its subsidiaries to grant, extend or enter into
any such option, warrant, call, subscription or other right,
agreement or commitment. As of the date hereof, there are no
outstanding contractual obligations of Parent or any of its
subsidiaries to repurchase, redeem or otherwise acquire any
shares of capital stock of Parent.
(b) The authorized capital stock of Merger Sub
consists of 1,000 shares of common stock, without par value,
all of which are duly authorized, validly issued, fully
paid and nonassessable and free of any pre-emptive rights in
respect thereof and all of which are owned by Parent.
SECTION 4.03. Authority. Each of Parent and Merger
Sub has the requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions
contemplated by this Agreement. The execution and delivery of
this Agreement by Parent and Merger Sub and the consummation by
Parent and Merger Sub of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on
the part of Parent and Merger Sub and does not require the
approval of the shareholders of Parent. This Agreement has been
duly executed and delivered by Parent and Merger Sub and,
assuming this Agreement constitutes the valid and binding
obligation of the Company, constitutes the valid and binding
obligation of Parent and Merger Sub, enforceable against Parent
and Merger Sub in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and similar
laws, now or hereafter in effect, affecting creditors' rights and
remedies and to general principles of equity.
SECTION 4.04. Noncontravention; Filings and Consents.
(a) The execution and delivery of this Agreement by either
Parent or Merger Sub do not, and the consummation of the
transactions contemplated by this Agreement and compliance with
the provisions of this Agreement will not, conflict with, or
result in any violation of, or default (with or without notice or
lapse of time, or both) under, or give rise to a right of
termination, cancellation, or acceleration of any obligation or
to loss of a material benefit under, or result in the creation of
any lien upon any of the properties or assets of Parent or Merger
Sub or any of Parent's subsidiaries under (i) the Articles of
Incorporation or By-Laws of either Parent or Merger Sub or the
comparable charter or organizational documents of any of Parent's
Significant Subsidiaries, (ii) any loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable
to Parent or Merger Sub or any of Parent's Significant
Subsidiaries or their respective properties or assets or (iii)
subject to the governmental filings and other matters referred to
in paragraph (b) below, any judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Parent or Merger
Sub or any of Parent's subsidiaries or their respective
properties or assets, other than, in the case of clauses (ii) and
(iii), any such conflicts, violations, defaults, rights or liens
that individually or in the aggregate would not (x) impair in any
material respect the ability of Parent or Merger Sub to perform
their respective obligations under this Agreement or (y) prevent
or impede, in any material respect, the consummation of the
transactions contemplated by this Agreement.
(b) No consent, approval, order or authorization of,
or registration, declaration or filing with, any Governmental
Entity, is required by Parent or Merger Sub or any of Parent's
subsidiaries in connection with the execution and delivery of
this Agreement by Parent or Merger Sub or the consummation by
Parent or Merger Sub of the transactions contemplated by this
Agreement, except for (i) the filing of a premerger notification
and report form by Parent and Merger Sub under the HSR Act, (ii)
the filing with the SEC of the Proxy Statement and the
Registration Statement, (iii) the filing of a notification with
the European Commission under Regulation 4064/89, (iv) the filing
of the Articles of Merger with the North Carolina Secretary of
State and appropriate documents with the relevant authorities of
other states in which Parent is qualified to do business, (v) the
filing of such notices and other reports as may be required to
comply with the CTA, (vi) such as may be required by any
applicable state securities or "blue sky" laws and (vii) such
other consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or
made would not, individually or in the aggregate, (x) impair in
any material respect the ability of Parent or Merger Sub to
perform their respective obligations under this Agreement or (y)
prevent or impede, in any material respect, the consummation of
the transactions contemplated by this Agreement.
SECTION 4.05. Parent SEC Documents; Financial
Statements. Parent has filed all required reports, proxy
statements, forms, and other documents with the SEC since
December 31, 1993 and prior to the date of this Agreement (the
"Parent SEC Documents"). As of their respective dates, (i) the
Parent SEC Documents complied, and all similar documents filed
prior to the Closing Date will comply, in all material respects
with the requirements of the Securities Act or the Exchange Act,
as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such Parent SEC Documents
and (ii) none of the Parent SEC Documents contained, nor will any
similar document filed after the date of this Agreement contain,
any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial
statements of Parent included in the Parent SEC Documents
(including any similar documents filed after the date of this
Agreement) comply as to form in all material respects with
applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared
in accordance with generally accepted accounting principles
(except, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the notes
thereto) and fairly present the consolidated financial position
of Parent and its consolidated subsidiaries as of the dates
thereof and the consolidated results of their operations and cash
flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
Except as set forth in the Parent SEC Documents, and except for
liabilities and obligations incurred in the ordinary course of
business consistent with past practice since the date of the most
recent consolidated balance sheet included in the Parent SEC
Documents, neither Parent nor any of its subsidiaries has any
liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by generally accepted
accounting principles to be set forth on a consolidated balance
sheet of Parent and its consolidated subsidiaries or in the notes
thereto and which, individually or in the aggregate, would
reasonably be expected to have a material adverse effect.
SECTION 4.06. Information Supplied. None of the
information supplied or to be supplied by Parent or Merger Sub
expressly for inclusion or incorporation by reference in the
Registration Statement and the Proxy Statement will, (i) on the
date the Proxy Statement is first mailed to the shareholders of
the Company and Parent, (ii) at the time the Registration
Statement becomes effective and (iii) at the time of the Company
Shareholders' Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not
misleading, except that no representation or warranty is made by
Parent or Merger Sub with respect to statements made or
incorporated by reference therein based on information supplied
by the Company specifically for inclusion or incorporation by
reference therein. The Registration Statement and the Proxy
Statement will comply as to form in all material respects with
the requirements of the Exchange Act and the Securities Act and
the rules and regulations thereunder.
SECTION 4.07. Absence of Certain Changes or Events.
Except as disclosed in the Parent SEC Documents or contemplated
by this Agreement, since June 30, 1995 and prior to the date of
this Agreement, Parent and its subsidiaries have conducted their
respective businesses only in the ordinary course, and there has
not been (i) any declaration, setting aside or payment of any
dividend or other distribution with respect to Parent's capital
stock other than the regular quarterly dividends on the shares of
Parent Common Stock and the $4 Preferred, (ii) any split,
combination or reclassification of any of Parent's capital stock
or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for
shares of its capital stock or (iii) any change in accounting
methods, principles or practices by Parent materially affecting
its assets, liabilities or business, except insofar as may have
been required by a change in generally accepted accounting
principles. Except as disclosed in the Parent SEC Documents,
since June 30, 1995, there has not been (i) any material adverse
change in Parent or (ii) any damage, destruction or loss, whether
or not covered by insurance, that has or reasonably could be
expected to have, a material adverse effect on Parent.
SECTION 4.08. Litigation. Except as disclosed in the
Parent SEC Documents, there are no suits, actions or proceedings
pending or, to the knowledge of Parent, threatened against Parent
or any of its subsidiaries that would reasonably be expected to
have, individually or in the aggregate, a material adverse
effect. Except as disclosed in the Parent SEC Documents, neither
Parent nor any of its subsidiaries is subject to any outstanding
order, writ, injunction or decree that would reasonably be
expected to have a material adverse effect.
SECTION 4.09. Environmental Matters. Except as
disclosed in the Parent SEC Documents and except as would not,
individually or in the aggregate, be reasonably expected to
result in a material adverse effect, to the knowledge of Parent,
(i) Parent and its subsidiaries are in compliance with all
applicable Environmental Laws and the terms and conditions of all
applicable Environmental Permits and (ii) no Hazardous Materials
have been released, discharged or disposed of on any of the
properties owned or occupied by Parent or its subsidiaries in any
manner or quantity which requires investigation, assessment,
monitoring, remediation or cleanup under currently applicable
Environmental Laws.
SECTION 4.10. Reorganization. To the knowledge of
Parent, neither Parent nor any of its subsidiaries has taken any
action or failed to take any action which action or failure would
jeopardize the qualification of the Merger as a reorganization
within the meaning of Section 368(a) of the Code.
SECTION 4.11. Ownership of Company Capital Stock.
Neither Parent nor Merger Sub nor any of their respective
affiliates is the beneficial owner of any shares of capital stock
of the Company.
SECTION 4.12. Interim Operations of Merger Sub.
Merger Sub was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement and has not engaged
in any business activities or conducted any operations other than
in connection with the performance of its obligations hereunder.
SECTION 4.13. Brokers. No broker, investment banker,
financial advisor or other person, other than CS First Boston
Corporation, the fees and expenses of which will be paid by
Parent, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with
the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent or Merger Sub.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 5.01. Conduct of Business of the Company.
Prior to the Effective Time, the Company agrees (except as
expressly contemplated or permitted by this Agreement, as set
forth in Schedule 5.01 of the Company Disclosure Schedule, or to
the extent that Parent shall otherwise consent in writing) as
follows:
(a) Ordinary Course. The Company and its subsidiaries
shall carry on their respective businesses in the usual,
regular and ordinary course in substantially the same manner
as heretofore conducted and shall use all reasonable efforts
to preserve intact their present business organizations,
keep available the services of their present officers and
employees and preserve their relationships with customers,
suppliers and others having business dealings with the
Company and its subsidiaries.
(b) Dividends; Changes in Stock. The Company shall
not (i) declare or pay any dividends on or make other
distributions in respect of any of its capital stock other
than regular quarterly dividends not to exceed $0.40 per
share on the Company Common Stock and dividends required to
be paid pursuant to the terms of the Convertible Preferred
Stock, (ii) split, combine or reclassify any of its capital
stock or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (iii) except
as contemplated by Section 6.08, repurchase, redeem or
otherwise acquire, or permit any subsidiary to repurchase,
redeem or otherwise acquire, any shares of capital stock.
(c) Issuance of Securities. The Company shall not,
and it shall not permit any of its subsidiaries to, issue,
deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock of any
class or any securities convertible into, or any rights,
warrants, calls, subscriptions or options to acquire, any
such shares or convertible securities, or any other
ownership interest other than (i) the issuance of shares of
Company Common Stock upon the exercise of stock options or
stock appreciation rights or warrants granted under the
Company Stock Option Plans (as defined in Section 6.05) and
outstanding on the date of this Agreement and in accordance
with the present terms of such options or stock appreciation
rights, (ii) issuances by a wholly owned subsidiary of the
Company of its capital stock to the Company and (iii) the
issuance of shares of Company Common Stock upon conversion
of shares of Convertible Preferred Stock.
(d) Governing Documents. The Company shall not amend
or propose to amend its Articles of Incorporation, as
amended, or By-Laws.
(e) No Acquisitions. The Company shall not, and it
shall not permit any of its subsidiaries to, acquire or
agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in or substantial
portion of the assets of, or by any other manner, any
business or any corporation, partnership, association or
other business organization or division thereof.
(f) No Dispositions. The Company shall not, and it
shall not permit any of its subsidiaries to, sell, lease,
encumber or otherwise dispose of, or agree to sell, lease,
encumber or otherwise dispose of, any of its material assets
other than (i) sales in the ordinary course of business
consistent with past practice, (ii) equipment and property
no longer used in the operation of the Company's business
and (iii) assets related to discontinued operations of the
Company or its subsidiaries.
(g) Indebtedness. The Company shall not, and it shall
not permit any of its subsidiaries to, incur (which shall
not be deemed to include entering into credit agreements,
lines of credit or similar arrangements until borrowings are
made under such arrangements) any indebtedness for borrowed
money or guarantee any such indebtedness or issue or sell
any debt securities or warrants or rights to acquire any
debt securities of the Company or any of its subsidiaries or
guarantee any debt securities of others, except in the
ordinary course of business consistent with past practice,
including, without limitation, borrowings under the
Company's existing credit agreements and overnight
borrowings.
(h) Tax Matters. The Company shall not make any tax
election that would have a material adverse effect or settle
or compromise any income tax liability of the Company or of
any of its subsidiaries that would have a material adverse
effect. The Company shall, before filing or causing to be
filed any material tax return of the Company or any of its
subsidiaries, consult with Parent and its advisors as to the
positions and elections that may be taken or made with
respect to such return.
(i) Discharge of Liabilities. The Company shall not,
and it shall not permit any of its subsidiaries to, pay,
discharge, settle or satisfy any claim, liabilities or
obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise) in any amount in excess of $3
million, other than the payment, discharge or satisfaction,
in the ordinary course of business consistent with past
practice or in accordance with their terms, of liabilities
recognized or disclosed in the most recent consolidated
financial statements (or the notes thereto) of the Company
included in the Company SEC Documents or incurred since the
date of such financial statements in the ordinary course of
business consistent with past practice, or waive the benefit
of, or agree to modify in any manner, any confidentiality,
standstill or similar agreement to which the Company or any
of its subsidiaries is a party.
(j) Material Contracts. Except in the ordinary course
of business, neither the Company nor any of its subsidiaries
shall modify, amend or terminate any material contract or
agreement to which the Company or such subsidiary is a party
or waive, release or assign any material rights or claims.
(k) Employee Benefits. The Company shall not, and
shall not permit any of its subsidiaries to, (i) grant any
increase in the compensation of any of its directors,
officers or key employees, except for increases for officers
and employees in the ordinary course of business, (ii) pay
or agree to pay any pension, retirement allowance or other
employee benefit not required or contemplated by any of the
existing Company Benefit Plans as in effect on the date
hereof to any director, officer or key employee, (iii) enter
into any new employment, severance or termination agreement
with any such director, officer or key employee or
(iv) except as may be required to comply with applicable
law, become obligated under any Company Benefit Plan which
was not in existence on the date hereof or amend any such
plan in existence on the date hereof to enhance the benefits
thereunder.
(1) Capital Expenditures. The Company shall not, and
shall not permit any of its subsidiaries to, authorize or
make any capital expenditures other than capital
expenditures (i) described in the summary of approved
capital expenditures set forth in Schedule 5.01 of the
Company Disclosure Schedule, (ii) incurred in the ordinary
course of the business of the Company and its subsidiaries
as currently conducted (including, without limitation,
capital expenditures required as a result of ordinary
maintenance and repair) or (iii) not otherwise described in
clauses (i) and (ii) above which, in the aggregate, do not
exceed $60 million.
SECTION 5.02. Conduct of Business of Parent. Prior to
the Effective Time, Parent agrees (except as expressly
contemplated or permitted by this Agreement, or to the extent
that the Company shall otherwise consent in writing) as follows:
(a) Dividends; Changes in Stock. Parent shall not (i)
engage in any material repurchase at a premium,
recapitalization, restructuring or reorganization with
respect to Parent's capital stock, including, without
limitation, by way of any extraordinary dividends on or
other extraordinary distributions in respect of any of its
capital stock, or (ii) amend any material term or provision
of Parent Common Stock.
(b) Material Acquisitions. Parent shall not, and
shall not permit any of its subsidiaries to, acquire or
agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of or equity
in, or by any other manner, any business or any corporation,
partnership, association or other business organization or
division thereof, or otherwise acquire or agree to acquire
any assets if the entering into of a definitive agreement
relating to or the consummation of such acquisition, merger
or consolidation would (A) impose any material delay in the
obtaining of, or significantly increase the risk of not
obtaining, any authorizations, consents, orders,
declarations or approvals of any Governmental Entity
necessary to consummate the Merger or the expiration or
termination of any applicable waiting period, (B)
significantly increase the risk of any Governmental Entity
entering an order prohibiting the consummation of the Merger
or (C) significantly increase the risk of not being able to
remove any such order on appeal or otherwise.
(c) Other Actions. Parent shall not, and shall not
permit any of its subsidiaries to take, or fail to take, any
other action which would reasonably be expected to impede,
interfere with, prevent or materially delay the Merger.
SECTION 5.03. Other Actions. Each of Parent, Merger
Sub and the Company shall not, and shall not permit any of its
subsidiaries to, take any action that would, or that would
reasonably be expected to, result in (i) any of its
representations and warranties set forth in this Agreement that
are qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that are not so qualified becoming
untrue in any material respect or (iii) except as otherwise
permitted by Section 5.04 or Section 6.01, any of the conditions
to the Merger set forth in Article VII not being satisfied.
SECTION 5.04. No Solicitation. (a) The Company shall
not, nor shall it permit any of its subsidiaries to, nor shall it
authorize or permit any officer, director or employee of, or any
investment banker, attorney or other advisor or representative
of, the Company or any of its subsidiaries to, (i) solicit or
initiate, or knowingly encourage the submission of, any
"competitive proposal" (as defined below in this Section 5.04(a))
or (ii) participate in any discussions or negotiations regarding,
or furnish to any person any information with respect to, or take
any other action to knowingly facilitate the making of any
proposal that constitutes, or may reasonably be expected to lead
to, a competitive proposal; provided, however, that, prior to the
Effective Time, if the Board of Directors concludes, after
consultation with counsel, that its fiduciary duties to the
Company's shareholders under applicable law require such action,
the Company may, in response to an unsolicited competitive
proposal, (x) furnish information with respect to the Company to
the party making such competitive proposal and its
representatives, counsel and advisors pursuant to a
confidentiality agreement with such party containing customary
terms and provisions regarding the nondisclosure of confidential
information and (y) participate in negotiations regarding such
competitive proposal; provided, further, upon the furnishing of
such information to any such party, the Company shall notify
Parent that it has done so and shall identify such party in such
notice. Without limiting the foregoing, it is understood that
any violation of the restrictions set forth in the preceding
sentence by any director, officer, investment banker, attorney or
other advisor or representative of the Company or any of its
subsidiaries, whether or not such person is purporting to act on
behalf of the Company or any of its subsidiaries or otherwise,
shall be deemed to be a breach of this Section 5.04(a) by the
Company. For purposes of this Agreement, "competitive proposal"
means any proposal or offer from any person relating to any
direct or indirect acquisition or purchase of all or a
substantial part of the assets of the Company or any of its
subsidiaries (other than the Convertible Preferred Stock) or of
over 50% of any class of equity securities of the Company or any
of its subsidiaries, any tender offer or exchange offer that if
consummated would result in any person beneficially owning 50% or
more of any class of equity securities of the Company or any of
its subsidiaries (other than the Convertible Preferred Stock),
any merger, consolidation, business combination, sale of
substantially all the assets, recapitalization, liquidation,
dissolution or similar transaction involving the Company or any
of its subsidiaries, other than the transactions contemplated by
this Agreement, or any other transaction the consummation of
which would reasonably be expected to impede, interfere with,
prevent or materially delay the Merger or which would reasonably
be expected to dilute materially the benefits to Parent of the
transactions contemplated hereby. The Company agrees not to
release any third party from, or waive any provision of, any
confidentiality or standstill agreement to which the Company is a
party.
(b) Except as set forth in this Section 5.04(b) or
Section 6.01, neither the Board of Directors of the Company nor
any committee thereof shall (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Parent, the approval
or recommendation by the Board of Directors or any such committee
of this Agreement or the Merger, (ii) approve or recommend, or
propose to approve or recommend, any competitive proposal or
(iii) enter into any agreement with respect to any competitive
proposal. Notwithstanding the foregoing, in the event prior to
the Effective Time if the Board of Directors concludes, after
consultation with counsel, failure to do so would violate its
fiduciary duties to the Company's shareholders under applicable
law, the Board of Directors may withdraw or modify its approval
or recommendation of this Agreement or the Merger, approve or
recommend a competitive proposal, or enter into an agreement with
respect to a competitive proposal, in each case involving a
competitive proposal at any time after midnight on the third
business day following Parent's receipt of written notice
advising Parent that the Board of Directors has received a
competitive proposal which includes a description of the material
terms and conditions of such proposal and which it intends to
consider accepting, specifying the material terms and conditions
of such competitive proposal and identifying the person making
such competitive proposal. Notwithstanding anything to the
contrary in the foregoing, from the date of this Agreement until
February 28, 1996, the Company shall not (i) engage in
negotiations with or provide information to any party making a
competitive proposal unless the Board of Directors concludes that
such proposal could reasonably be expected to lead to a
transaction which is financially superior to the transactions
contemplated by this Agreement or (ii) enter into any agreement
with respect to a competitive proposal unless the Board of
Directors of the Company determines, after consultation with its
financial advisors, that such competitive proposal is financially
superior to the transactions contemplated by this Agreement. The
Company shall consider any proposal submitted by Parent that
enhances the value to be received by the Company's shareholders
pursuant to the terms of this Agreement. Nothing contained in
this Section 5.04 shall prohibit the Company from taking and
disclosing to its shareholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any
disclosure to the Company's shareholders if, in the opinion of
the Company's Board of Directors, after consultation with
counsel, failure to so disclose would be inconsistent with its
fiduciary duties under applicable law.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Company Shareholders' Meeting. Subject
to the following sentence, the Company shall call and hold a
meeting of its shareholders (the "Company Shareholders' Meeting")
as promptly as practicable to consider and vote upon the approval
of this Agreement and the Company shall use its reasonable
efforts to hold the Company Shareholders' Meeting as soon as
practicable after the date on which the Registration Statement
becomes effective. The Board of Directors of the Company shall
recommend such approval, and the Company shall take all lawful
action to solicit such approval, including, without limitation,
timely mailing the Proxy Statement; provided, however, that
calling the Company Shareholders' Meeting, mailing the Proxy
Statement and making such recommendation or solicitation is
subject to any action (including any withdrawal or change of its
recommendation) taken by, or upon authority of, the Board of
Directors of the Company (i) upon concluding after consultation
with counsel that the failure to so act would violate its
fiduciary duties to its shareholders under applicable law or (ii)
in the event that (A) each of J.P. Morgan Securities Inc. and
Goldman, Sachs & Co. shall have withdrawn its opinion to the
effect that, in the case of J.P. Morgan Securities Inc., the
consideration to be received in the Merger by the holders of
Company Common Stock is fair to such holders from a financial
point of view, and in the case of Goldman, Sachs & Co., that the
consideration to be received in the Merger by the holders of
Company Common Stock is fair to such holders or (B) each such
firm shall have failed to deliver its updated written opinion to
the same effect dated the date of the Proxy Statement.
Notwithstanding anything to the contrary contained in this
Agreement, any such failure to call the Company Shareholders'
Meeting, solicit proxies or take other action to secure the vote
or consent of shareholders permitted by the terms of this Section
6.01 shall not constitute a breach of this Agreement by Parent or
the Company, as the case may be.
SECTION 6.02. Registration Statement; Proxy Statement.
(a) As promptly as practicable after the execution of this
Agreement, (i) Parent and the Company shall cooperate and prepare
and Parent shall file with the SEC a registration statement on
Form S-4 (together with all amendments thereto, the "Registration
Statement") in connection with the registration under the
Securities Act of the shares of Parent Common Stock to be issued
to the shareholders of the Company in the Merger, a portion of
which Registration Statement shall also serve as the proxy
statement (together with any amendments thereof or supplements
thereto, the "Proxy Statement") relating to the Company
Shareholders' Meeting. The respective parties will cause the
Proxy Statement and the Registration Statement to comply as to
form in all material respects with the applicable provisions of
the Securities Act, the Exchange Act and the rules and
regulations thereunder. The Company shall furnish all
information concerning the Company as Parent may reasonably
request in connection with such actions and the preparation of
the Registration Statement and the Proxy Statement. Parent shall
use all reasonable efforts, and the Company will cooperate with
Parent, to cause the Registration Statement to become effective
as promptly as practicable and to keep the Registration Statement
effective as long as is necessary to consummate the Merger.
Prior to the effective date of the Registration Statement, Parent
shall take all action required under any applicable federal or
state securities laws in connection with the issuance of shares
of Parent Common Stock pursuant to the Merger. Parent shall, as
promptly as practicable, provide copies of any written comments
received from the SEC with respect to the Registration Statement
to the Company and advise the Company of any verbal comments with
respect to the Registration Statement received from the SEC. As
promptly as practicable after the Registration Statement shall
have become effective, the Company shall mail the Proxy Statement
to its shareholders.
(b) No amendment or supplement to the Proxy Statement
or the Registration Statement will be made by Parent or the
Company without the approval of the other party. Parent will
advise the Company, promptly after it receives notice thereof, of
the time when the Registration Statement has become effective or
any supplement or amendment has been filed, of the issuance of
any stop order, of the suspension of the qualification of Parent
Common Stock issuable in connection with the Merger for offering
or sale in any jurisdiction, or of any request by the SEC for
amendment of the Proxy Statement or the Registration Statement or
comments thereon and responses thereto or requests by the SEC for
additional information.
(c) Notwithstanding anything to the contrary in this
Agreement, (i) Parent shall have no obligation to mail the Proxy
Statement to the Company's stockholders unless and until Parent
shall have received the "comfort letter" referred to in Section
6.15(a) and (ii) the Company shall have no obligation to mail the
Proxy Statement to its stockholders unless and until the Company
shall have received the "comfort letter" referred to in Section
6.15(b).
SECTION 6.03. Access to Information; Confidentiality.
(a) As permitted by law, the Company shall afford to Parent, and
to Parent's officers, employees, accountants, counsel, financial
advisors and other representatives, reasonable access during
normal business hours during the period prior to the Effective
Time to all the properties, books, contracts, commitments and
records of the Company and its subsidiaries, and during such
period, the Company shall furnish promptly to Parent (a) a copy
of each report, schedule, registration statement and other
document filed by it or its subsidiaries during such period
pursuant to the requirements of applicable federal or state
securities laws and (b) all other information concerning its
business, properties and personnel as Parent may reasonably
request. Until the Effective Time, Parent will be bound by the
terms of the confidentiality agreement with the Company dated
September 28, 1995 (the "Confidentiality Agreement"), except as
otherwise agreed to by the Company.
(b) As permitted by law, Parent shall afford to the
Company, and to the Company's officers, employees, accountants,
counsel, financial advisors and other representatives, reasonable
access during normal business hours during the period prior to
the Effective Time to all the properties, books, contracts,
commitments and records of Parent and its subsidiaries reasonably
necessary in connection with preparing the Proxy Statement,
including the opinions of Goldman, Sachs & Co. and J.P. Morgan
Securities Inc., dated the date of the Proxy Statement, and
during such period, Parent shall furnish promptly to the Company
a copy of each report, schedule, registration statement and other
document filed by it or its subsidiaries during such period
pursuant to the requirements of federal or state securities laws.
The Company will keep such information provided to it by Parent
confidential, except to the extent such information (i) is
provided to the Company for its use in connection with the
preparation of the Proxy Statement, (ii) is or becomes generally
available to the public (other than as a result of a disclosure
by the Company), (iii) was available to the Company on a
nonconfidential basis prior to disclosure by Parent to the
Company or (iv) becomes available to the Company on a
nonconfidential basis from a source other than Parent which is
entitled to disclose it, and except as required by law or as
otherwise agreed to by Parent.
SECTION 6.04. Approvals and Consents; Cooperation.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, each of the parties agrees to use all reasonable
efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated
by this Agreement, including (i) the obtaining of all necessary
actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental
Entities) and the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Entity, (ii) the
obtaining of all necessary consents, approvals or waivers from
third parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, investigating or
challenging this Agreement or the consummation of any of the
transactions contemplated by this Agreement, including seeking to
have any stay or temporary restraining order entered by any court
or other Governmental Entity vacated or reversed and (iv) the
execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by, and to fully carry
out the purposes of, this Agreement.
(b) Parent and the Company shall file as soon as
practicable after the date of this Agreement notifications under
the HSR Act and shall respond as promptly as practicable to all
inquiries or requests received from the Federal Trade Commission
or the Antitrust Division of the Department of Justice for
additional information or documentation and shall respond as
promptly as practicable to all inquiries and requests received
from any State Attorney General or other Governmental Entity in
connection with antitrust matters. The parties shall cooperate
with each other in connection with the making of all such filings
or responses, including providing copies of all such documents to
the other party and its advisors prior to filing or responding.
Parent and Merger Sub agree to use their respective best efforts
to avoid the entry of (or, if entered, to lift, vacate or
reverse) any order, decree, judgment or ruling of any court or
Governmental Entity restraining or preventing the consummation of
the Merger on the basis of any federal, state or local antitrust
laws or regulations, including by committing to or effecting (by
consent decree, hold separate order or otherwise) the sale or
disposition of such assets of Parent or the Company as may be
required to avoid (or, if entered, to lift, vacate or reverse)
any such order, decree, judgment or ruling; provided, however,
that in no event shall Parent, the Company or Merger Sub be
obligated under this Section 6.04 to sell, or hold separate, a
pulp mill, a paper plant or a paper machine.
SECTION 6.05. Company Stock Options. (a) All options
(the "Company Stock Options") outstanding, whether or not
exercisable and whether or not vested, at the Effective Time
under the Company's 1992 Key Employees Stock Option Plan, 1992
Stock Option for Non-Employee Directors and 1989 Key Employees
Stock Option Plan (collectively, the "Company Stock Option
Plans"), shall remain outstanding following the Effective Time.
A listing of all outstanding Company Stock Options as of November 5,
1995, showing what portions of such Company Stock Options are
exercisable as of such date, the dates upon which such Company
Stock Options expire, the exercise price of such Company Stock
Options, the number of limited rights tandem thereto, and whether
such option is intended to qualify as an "incentive stock
opinion" within the meaning of Section 422 of the Code, is set
forth in Schedule 6.05 of the Company Disclosure Schedule. At
the Effective Time, the Company Stock Options shall, by virtue of
the Merger and without any further action on the part of the
Company or the holder thereof, be assumed by Parent in such
manner that Parent (i) is a corporation "assuming a stock option
in a transaction to which Section 424(a) applied" within the
meaning of Section 424 of the Code or (ii) to the extent that
Section 424 of the Code does not apply to any such Company Stock
Options, would be such a corporation were Section 424 of the Code
applicable to such Company Stock Options. From and after the
Effective Time, all references to the Company in the Company
Stock Option Plans and the applicable stock option agreements
issued thereunder shall be deemed to refer to Parent, which shall
have assumed the Company Stock Option Plans as of the Effective
Time by virtue of this Agreement and without any further action.
Each Company Stock Option assumed by Parent (each, a "Substitute
Option") shall be exercisable upon the same terms and conditions
as under the applicable Company Stock Option Plan and the
applicable option agreement issued thereunder, except that (A)
each such Substitute Option shall be exercisable for, and
represent the right to acquire, that whole number of shares of
Parent Common Stock (rounded up or down to the nearest whole
share) equal to the number of shares of Company Common Stock
subject to such Company Stock Option multiplied by the Stock
Consideration; and (B) the option price per share of Parent
Common Stock shall be an amount equal to the option price per
share of Company Common Stock subject to such Company Stock
Option in effect immediately prior to the Effective Time divided
by the Stock Consideration (the option price per share, as so
determined, being rounded upward to the nearest full cent). Such
Substitute Option shall otherwise be subject to the same terms
and conditions as such Company Stock Option, which in accordance
with the terms thereof and pursuant to action heretofore taken by
the Compensation Committee of the Company's Board of Directors
shall vest and become immediately exercisable as of the Effective
Time, and any limited rights relating to such Company Stock
Option shall continue to be exercisable until thirty days
following the Effective Time.
(b) As soon as practicable after the Effective Time,
Parent shall deliver to each holder of an outstanding Company
Stock Option an appropriate notice setting forth such holder's
rights pursuant thereto and such Company Stock Option shall
continue in effect on the same terms and conditions (including
any antidilution provisions, and subject to the adjustments
required by this Section 6.05 after giving effect to the Merger).
Parent shall comply with the terms of all such Company Stock
Options and ensure, to the extent required by, and subject to the
provisions of, the Company Stock Option Plans, that Company Stock
Options which qualified as incentive stock options under Section
422 of the Code prior to the Effective Time continue to qualify
as incentive stock options after the Effective Time. Parent
shall take all corporate action necessary to reserve for issuance
a sufficient number of shares of Parent Common Stock for delivery
upon exercise of Substitute Options pursuant to the terms set
forth in this Section 6.05. As soon as practicable after the
Effective Time, the shares of Parent Common Stock subject to
Company Stock Options will be covered by an effective
registration statement on Form S-8 (or any successor form) or
another appropriate form and Parent shall use its reasonable
efforts to maintain the effectiveness of such registration
statement or registration statements for so long as Substitute
Options remain outstanding. In addition, Parent shall use all
reasonable efforts to cause the shares of Parent Common Stock
subject to Company Stock Options to be listed on the Stock
Exchange and such other exchanges as Parent shall determine.
SECTION 6.06. Company Benefit Plans. (a) For a
period of at least two years after the Effective Time, Parent
shall cause the Surviving Corporation to continue to maintain the
Company's existing compensation, severance, welfare and pension
benefit plans, programs and arrangements (other than any stock-
based plans, programs and arrangements for which alternative
incentive compensation plans will be put into effect pursuant to
paragraph (b) below) for the benefit of current and former
employees of the Company and its subsidiaries (subject to such
modification as may be required by applicable law or to maintain
the tax exempt status of any such plan which is intended to be
qualified under Section 401(a) of the Code); provided, however,
that nothing herein shall prohibit Parent from (i) replacing any
such existing plan, program or arrangement with a plan, program
or arrangement which provide such employees with benefits which
are not less favorable in the aggregate than the benefits that
would have been provided under such existing plan, program or
arrangement to the extent such replacement is permitted under the
terms of the applicable plan, program or arrangement or (ii)
including current employees of the Company in the plans, programs
and arrangements generally available to employees of Parent and
its subsidiaries other than the Surviving Corporation in lieu of
participation in any Company plan, program or arrangement.
(b) All service credited to each employee by the
Company through the Effective Time shall be recognized by Parent
for all purposes, including for purposes of eligibility, vesting
and benefit accruals under any employee benefit plan provided by
Parent for the benefit of the employees; provided, however, that,
to the extent necessary to avoid duplication of benefits, amounts
payable under employee benefit plans provided by Parent may be
reduced by amounts payable under similar Company plans with
respect to the same periods of service. Any benefits accrued by
employees of the Company and its subsidiaries prior to the
Effective Time under any of the Company's defined benefit pension
plans that employ a final average pay formula shall be calculated
based on such employees' final average pay with the Surviving
Corporation or any successor to the Surviving Corporation or
other affiliate of Parent employing such employees. In addition,
with respect to any welfare benefit plan established or
maintained by Parent or its subsidiaries for the benefit of
employees of the Company, Parent shall, or shall cause the
relevant subsidiary to, waive any pre-existing condition
exclusions (other than any pre-existing condition that was not
waived by a Company plan) and provide that any covered expenses
incurred on or before the Effective Time in respect of the
current plan year by any employee of the Company (or any covered
dependent of such an employee) shall be taken into account for
purposes of satisfying applicable deductible, coinsurance and
maximum out-of-pocket provisions after the Effective Time in
respect of such current plan year.
(c) Parent hereby agrees to cause the Surviving
Corporation to honor (without modification) and assume the
severance policies, employment agreements, executive termination
agreements and individual benefit arrangements listed in Schedule
3.09 of the Company Disclosure Schedule.
(d) The provisions of this Section 6.06 shall not
apply to any employee subject to the terms of a collective
bargaining plan.
(e) The Company may pay bonuses with respect to 1995
to participants in the Company's Key Employees Long-Term
Compensation Plan (the "Long-Term Plan") in an amount per
participant not to exceed 60% of base salary as in effect on
January 1, 1995, and in an aggregate amount not to exceed $5.0
million. With respect to all other outstanding Contingent
Incentive Awards granted under the Long-Term Plan (payable in
respect of calendar years 1996 and 1997), such awards shall be
cancelled as of the Effective Time in exchange for the amounts
determined in accordance with, and payable subject to the terms
of, this Section 6.06(e). As of the Effective Time, the value of
each Contingent Incentive Award shall be (i) determined using a
price per share of Company Common Stock of $40 and (ii) otherwise
limited to the portion of such award accrued as of the Effective
Time by the Company for income statement purposes in accordance
with generally accepted accounting principles and past practice.
The amount determined in accordance with the immediately
preceding sentence shall be paid to the holder of each cancelled
Contingent Incentive Award on January 1, 1997; provided, however,
that such amount shall be forfeited upon any termination of the
participant's employment prior to such date other than as a
consequence of death, disability, retirement under the Company's
pension plans or involuntary termination under the severance
policy applicable to the participant.
SECTION 6.07. Indemnification and Insurance.
(a) Parent and the Surviving Corporation agree that the
indemnification obligations set forth in the Company's Articles
of Incorporation, as amended, and the Company's By-Laws, in each
case as of the date of this Agreement, shall survive the Merger
(and, prior to the Effective Time, Parent shall cause the
Articles of Incorporation and By-Laws of Merger Sub to reflect
such provisions) and shall not be amended, repealed or otherwise
modified for a period of six years after the Effective Time in
any manner that would adversely affect the rights thereunder of
the individuals who on or prior to the Effective Time were
directors, officers, employees or agents of the Company or its
subsidiaries.
(b) The Company shall, to the fullest extent permitted
under applicable law and regardless of whether the Merger becomes
effective, indemnify and hold harmless, and, after the Effective
Time, Parent and the Surviving Corporation shall, to the fullest
extent permitted under applicable law, indemnify and hold
harmless, each present and former director or officer of the
Company and each subsidiary of the Company and each such person
who served at the request of the Company or any subsidiary of the
Company as a director, officer, trustee, partner, fiduciary,
employee or agent of another corporation, partnership, joint
venture, trust, pension or other employee benefit plan or
enterprise (collectively, the "Indemnified Parties") against all
costs and expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages, liabilities and
settlement amounts paid in connection with any claim, action,
suit, proceeding or investigation (whether arising before or
after the Effective Time), whether civil, administrative or
investigative, arising out of or pertaining to any action or
omission in their capacity as an officer or director, in each
case occurring before the Effective Time (including the
transactions contemplated by this Agreement). Without limiting
the foregoing, in the event of any such claim, action, suit,
proceeding or investigation, (i) the Company or Parent and the
Surviving Corporation, as the case may be, shall pay the fees and
expenses of counsel selected by any Indemnified Party, which
counsel shall be reasonably satisfactory to the Company or to
Parent and the Surviving Corporation, as the case may be,
promptly after statements therefor are received (unless the
Surviving Corporation shall elect to defend such action) and (ii)
the Company and Parent and the Surviving Corporation shall
cooperate in the defense of any such matter; provided, however,
that neither the Company nor Parent or the Surviving Corporation
shall be liable for any settlement effected without its written
consent (which consent shall not be unreasonably withheld).
(c) For six years from the Effective Time, the
Surviving Corporation shall provide to the Company's current
directors and officers liability insurance protection of the same
kind and scope as that provided by the Company's directors' and
officers' liability insurance policies (copies of which have been
made available to Parent); provided, however, that in no event
shall the Surviving Corporation be required to expend in any one
year an amount in excess of 200% of the annual premiums currently
paid by the Company for such insurance; and, provided, further,
that if the annual premiums of such insurance coverage exceed
such amount, the Surviving Corporation shall be obligated to
obtain a policy with the greatest coverage available for a cost
not exceeding such amount.
(d) In the event the Company or the Surviving
Corporation or any of their respective successors or assigns (i)
consolidates with or merges into any other person or shall not be
the continuing or surviving corporation or entity in such
consolidation or merger or (ii) transfers all or substantially
all its properties and assets to any person, then, and in each
case, proper provision shall be made so that the successors and
assigns of the Company or the Surviving Corporation, as the case
may be, honor the indemnification obligations set forth in this
Section 6.07.
(e) The obligations of the Company, the Surviving
Corporation, and Parent under this Section 6.07 shall not be
terminated or modified in such a manner as to adversely affect
any director, officer, employee, agent or other person to whom
this Section 6.07 applies without the consent of such affected
director, officer, employees, agents or other persons (it being
expressly agreed that each such director, officer, employee,
agent or other person to whom this Section 6.07 applies shall be
third-party beneficiaries of this Section 6.07).
SECTION 6.08. Redemption of Convertible Preferred
Stock. Prior to the date on which the Registration Statement
becomes effective, the Company shall give notice to all holders
of Convertible Preferred Stock that, on a date designated by the
Company which shall be a date prior to the Effective Time, all
shares of Convertible Preferred Stock shall be called for
redemption, in accordance with the terms thereof as set forth in
Article Third of the Company's Articles of Incorporation, as
amended, at the price provided for therein. The Company will
cause the redemption to be consummated, and the shares of
Convertible Preferred Stock to no longer be outstanding, prior to
the Effective Time.
SECTION 6.09. Fees and Expenses. (a) Except as
provided below in this Section 6.09, all fees and expenses
incurred in connection with this Agreement and the Merger and any
other transaction contemplated by this Agreement shall be paid by
the party incurring such fees or expenses, whether or not the
Merger is consummated.
(b) The Company shall pay to Parent upon demand a fee
of $80.0 million (the "Termination Fee") if (i) Parent terminates
this Agreement pursuant to Section 8.01(c)(ii) or (c)(iii), (ii)
the Company terminates this Agreement pursuant to Section
8.01(f), (iii) (x) this Agreement is terminated by the Company or
Parent pursuant to Section 8.01(h), (y) prior to the Company
Shareholders' Meeting but after the date of this Agreement a
competitive proposal has been made to the Company and (z) within
one year of the date of such termination and as a result of such
competitive proposal, the Company enters into a definitive
agreement with respect to the transaction contemplated by such
competitive proposal, or (iv) (A) Parent or the Company
terminates this Agreement pursuant to Section 8.01(b), (B) prior
to such termination but after the date of this Agreement, a
competitive proposal has been made to the Company, (C) the Board
of Directors of the Company had withdrawn its recommendation or
approval of this Agreement because of the existence of such
competitive proposal or J.P. Morgan Securities Inc. and Goldman,
Sachs & Co. shall have failed to deliver the updated written
opinions contemplated by Section 6.01 because of the existence of
such competitive proposal, (D) the Company Shareholders' Meeting
shall not have occurred and (E) within one year of the date of
such termination and as a result of such competitive proposal,
the Company enters into a definitive agreement with respect to
the transaction contemplated by such competitive proposal;
provided, however, the Company shall not be obligated to pay the
Termination Fee to Parent if, at the time of any termination of
this Agreement referred to in clauses (i), (ii), (iii) or (iv) of
this paragraph (b), Parent shall be in material breach of any of
its material representations, warranties, covenants or agreements
set forth in this Agreement.
SECTION 6.10. Notification. Each of the Company and
Parent shall give prompt notice to the other of (i) any
representation or warranty made by it contained in this Agreement
that is qualified as to materiality becoming untrue or inaccurate
in any respect or any such representation or warranty that is not
so qualified becoming untrue or inaccurate in any material
respect or (ii) the failure by it to comply with or satisfy in
any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement; provided,
however, that no such notification shall affect the
representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under
this Agreement.
SECTION 6.11. Obligations of Merger Sub. Parent shall
take all action necessary to cause Merger Sub to perform its
obligations under this Agreement and to consummate the Merger on
the terms and subject to the conditions set forth in this
Agreement.
SECTION 6.12. Affiliates' Letters. No later than 45
days from the date of this Agreement, the Company shall deliver
to Parent a list of names and addresses of those persons who
were, in the Company's reasonable judgment, on such date,
affiliates within the meaning of Rule 145 of the rules and
regulations promulgated under the Securities Act (each such
person being an "Affiliate") of the Company. The Company shall
provide Parent with such information and documents as Parent
shall reasonably request for purposes of reviewing such list.
The Company shall use its reasonable efforts to deliver or cause
to be delivered to Parent, prior to the Effective Time, a letter
substantially in the form attached hereto as Exhibit A, executed
by each of the Affiliates of the Company identified in the
foregoing list and of any person who shall have become an
Affiliate of the Company subsequent to the delivery of such list.
SECTION 6.13. Plan of Reorganization. This Agreement
is intended to constitute a "plan of reorganization" within the
meaning of Section 1.368-2(g) of the income tax regulations
promulgated under the Code. From and after the date of this
Agreement and until the Effective Time, each party hereto shall
use its reasonable efforts, subject to the last sentence of
Section 2.03(g), to cause the Merger to qualify, and will not
knowingly take any actions or cause any actions to be taken which
could prevent the Merger from qualifying, as a reorganization
under the provisions of Section 368(a) of the Code. Following
the Effective Time, neither the Surviving Corporation, Parent nor
any of their affiliates shall knowingly take any action or
knowingly cause any action to be taken which would cause the
Merger to fail to qualify as a reorganization under Section
368(a) of the Code.
SECTION 6.14. Public Announcements. Unless otherwise
required by applicable law or the requirements of any listing
agreement with any applicable stock exchange, Parent and the
Company shall each use their reasonable efforts to consult with
each other before issuing any press release or otherwise making
any public statements with respect to this Agreement or any
transaction contemplated by this Agreement and shall not issue
any such press release or make any such public statement prior to
such consultation.
SECTION 6.15. Letters of Accountants. (a) The
Company shall use its reasonable efforts to cause to be delivered
to Parent a "comfort" letter of Deloitte & Touche, LLP, the
Company's independent public accountants, dated and delivered the
date on which the Registration Statement shall become effective,
and addressed to Parent, in the form, scope and content
contemplated by Statement on Auditing Standards No. 49 issued by
the American Institute of Certified Public Accountants, Inc.
("SAS 49"), relating to the financial statements and other
financial data with respect to the Company and its consolidated
subsidiaries included or incorporated by reference in the Proxy
Statement and such other matters as may be reasonably required by
Parent, and based upon procedures carried out to a specified date
not earlier than five days prior to the date thereof.
(b) Parent shall use its reasonable efforts to cause
to be delivered to the Company a "comfort" letter of Arthur
Andersen LLP, Parent's independent public accountants, dated the
date on which the Registration Statement shall become effective,
and addressed to the Company, in the form, scope and content
contemplated by SAS 49, relating to the financial statements and
other financial data with respect to Parent and its consolidated
subsidiaries included in or incorporated by reference in the
Proxy Statement and such other matters as may be reasonably
required by the Company, and based upon procedures carried out to
a specified date not earlier than five days prior to the date
thereof.
SECTION 6.16. Stock Exchange Listing. Parent shall
promptly prepare and submit to the Stock Exchange a listing
application covering the shares of Parent Common Stock to be
issued in the Merger and pursuant to Substitute Options, and
shall use its reasonable efforts to obtain, prior to the
Effective Time, approval for the listing of such Parent Common
Stock, subject to official notice to the Stock Exchange of
issuance, and the Company shall cooperate with Parent with
respect to such listing.
SECTION 6.17. Parent Board of Directors. Parent shall
take all necessary action to cause John R. Kennedy to be
appointed to the Board of Directors of Parent as of the Effective
Time, to serve until the next annual election of directors of
Parent. In connection with such election, Parent shall take all
necessary action to include John R. Kennedy as a nominee for the
Board of Directors of Parent recommended by such Board of
Directors for election by Parent's shareholders to the Board.
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to the Obligations of Each
Party. The obligations of the Company, Parent and Merger Sub to
consummate the Merger are subject to the satisfaction or waiver
on or prior to the Closing Date of the following conditions:
(a) Registration Statement. The Registration
Statement shall have become effective under the Securities
Act and no stop order suspending the effectiveness of the
Registration Statement shall have been issued by the SEC and
no proceeding for that purpose shall have been initiated by
the SEC.
(b) Company Shareholder Approval. This Agreement
shall have been approved by the requisite affirmative vote
of the shareholders of the Company in accordance with the
Company's Articles of Incorporation, as amended, and the
NCBCA.
(c) No Injunction or Restraint. No Governmental
Entity shall have enacted, issued, promulgated, enforced or
entered any law, rule, regulation or order which is then in
effect and has the effect of making the Merger illegal or
otherwise prohibiting consummation of the Merger.
(d) HSR Act. Any waiting period (and any extension
thereof) applicable to the consummation of the Merger under
the HSR Act shall have expired or been terminated.
(e) Stock Exchange Listing. The shares of Parent
Common Stock to be issued in the Merger and pursuant to
Substitute Options shall have been authorized for listing on
the Stock Exchange, subject to official notice of listing.
SECTION 7.02. Conditions to the Obligations of Parent
and Merger Sub. The obligations of Parent and Merger Sub to
consummate the Merger are subject to the satisfaction or waiver
by Parent on or prior to the Closing Date of the following
further conditions:
(a) Company Representations and Warranties. Each of
the representations and warranties of the Company contained
in this Agreement that is qualified by materiality shall be
true and correct on and as of the Closing Date as if made on
and as of such date (other than representations and
warranties which address matters only as of a certain date
which shall be true and correct as of such certain date) and
each of the representations and warranties that is not so
qualified shall be true and correct in all material respects
on and as of the Closing Date, as if made on and as of such
date (other than representations and warranties which
address matters only as of a certain date which shall be
true and correct in all material respects as of such certain
date), in each case except as contemplated or permitted by
this Agreement, and Parent shall have received a certificate
of the Chairman, President or Chief Financial Officer of the
Company to such effect.
(b) Company Agreements and Covenants. The Company
shall have performed or complied in all material respects
with all material agreements and covenants required by this
Agreement to be performed or complied with by it on or prior
to the Closing Date, and Parent shall have received a
certificate of the Chairman, President or Chief Financial
Officer of the Company to that effect.
(c) Consents and Approvals. All consents, approvals
and authorizations legally required to be obtained to
consummate the Merger shall have been obtained from all
Governmental Entities, except for such consents, approvals
and authorizations the failure of which to obtain would not
have a material adverse effect on Parent (assuming for
purposes of this paragraph (c) that the Merger shall have
been effected).
(d) Tax Opinion. Parent shall have received the
opinion of Skadden, Arps, Slate, Meagher & Flom, counsel to
Parent, based upon representation letters substantially in
the forms of Exhibits B and C to this Agreement, dated on or
about the Closing Date, and such other facts,
representations and assumptions concerning, among other
things, the actions of the shareholders of the Company as
counsel may reasonably deem relevant, to the effect that the
Merger will be treated for federal income tax purposes as a
reorganization qualifying under the provisions of Section
368(a) of the Code and that each of Parent, Merger Sub and
the Company will be a party to the reorganization within the
meaning of Section 368(b) of the Code, dated on the Closing
Date.
SECTION 7.03. Conditions to the Obligations of the
Company. The obligations of the Company to consummate the Merger
are subject to the satisfaction or waiver by the Company on or
prior to the Closing Date of the following further conditions:
(a) Parent Representations and Warranties. Each of
the representations and warranties of each of Parent and
Merger Sub contained in this Agreement that is qualified by
materiality shall be true and correct on and as of the
Closing Date as if made on and as of such date (other than
representations and warranties which address matters only as
of a certain date which shall be true and correct as of such
certain date) and each of the representations and warranties
that is not so qualified shall be true and correct in all
material respects on and as of the Closing Date as if made
on and as of such date (other than representations and
warranties which address matters only as of a certain date
which shall be true and correct in all material respects as
of such certain date), in each case except as contemplated
or permitted by this Agreement, and the Company shall have
received a certificate of the Chairman, President or Chief
Financial Officer of each of Parent and Merger Sub to such
effect.
(b) Parent Agreements and Covenants. Each of Parent
and Merger Sub shall have performed or complied in all
material respects with all material agreements and covenants
required by this Agreement to be performed or complied with
by it on or prior to the Closing Date, and the Company shall
have received a certificate of the Chairman, President or
Chief Financial Officer of each of Parent and Merger Sub to
that effect.
(c) Tax Opinion. The Company shall have received the
opinion of Shearman & Sterling, counsel to the Company,
based upon representation letters substantially in the forms
of Exhibits B and C to this Agreement, dated on or about the
Closing Date, and such other facts, representations and
assumptions concerning, among other things, the actions of
the shareholders of the Company as counsel may reasonably
deem relevant, to the effect that the Merger will be treated
for federal income tax purposes as a reorganization
qualifying under the provisions of Section 368(a) of the
Code and that each of Parent, Merger Sub and the Company
will be a party to the reorganization within the meaning of
Section 368(a) of the Code, dated on the Closing Date.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination. This Agreement may be
terminated and the Merger and the other transactions contemplated
by this Agreement may be abandoned at any time prior to the
Effective Time, whether before or after approval thereof by
shareholders of the Company or Parent, as follows:
(a) by mutual written consent of Parent and the
Company;
(b) by either Parent or the Company if the Effective
Time shall not have occurred on or before May 31, 1996;
provided, however, that the right to terminate this
Agreement under this Section 8.01(b) shall not be available
to any party whose failure to fulfill any obligation under
this Agreement has been the cause of, or resulted in, the
failure of the Effective Time to occur on or before May 31,
1996; provided further that, upon written notice to Parent
from the Company, Parent shall not have the right to
terminate this Agreement under this Section 8.01(b) until
August 31, 1996 if the Merger shall not have been
consummated as a result of (i) the Company or Parent having
failed by May 31, 1996 to receive all required regulatory
approvals or consents with respect to the Merger necessary
to satisfy the condition set forth in Section 7.02(c), (ii)
the entering of an order or any pending action commenced by
any applicable federal governmental antitrust authority
seeking an order which would have the effect of making the
Merger illegal or otherwise prohibiting consummation of the
Merger, or (iii) the failure of the condition set forth in
Section 7.01(d) to be satisfied;
(c) by Parent if (i) the Board of Directors of the
Company or any committee thereof shall have withdrawn or
modified in a manner adverse to Parent its approval or
recommendation of this Agreement and the Merger, (ii) the
Board of Directors of the Company or any committee thereof
shall have approved or recommended any competitive proposal
or (iii) the Company shall have entered into any agreement
with respect to any competitive proposal in accordance with
Section 5.04(b) of this Agreement;
(d) by either Parent or the Company if any
Governmental Entity shall have issued an order, decree or
ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the Merger and such
order, decree or ruling or other action shall have become
final and nonappealable; provided, however, that the party
seeking to terminate this Agreement under this Section
8.01(d) shall have used its best efforts to remove such
injunction, order or decree;
(e) by Parent in the event of a breach by the Company
of any representation, warranty, covenant or other agreement
contained in this Agreement which (A) would give rise to the
failure of a condition set forth in Section 7.02(a) or (b)
and (B) cannot be or has not been cured within 20 days after
the giving by Parent of written notice to the Company;
(f) by the Company in connection with entering into a
definitive agreement in accordance with Section 5.04(b),
provided it has complied with all provisions thereof,
including the notice provisions therein;
(g) by the Company if Merger Sub or Parent shall have
breached in any material respect any of their respective
representations, warranties, covenants or other agreements
contained in this agreement, which failure to perform is
incapable of being cured or has not been cured within 20
days after the giving of written notice by the Company to
Parent or Merger Sub, as applicable, except, in any case,
such failures which are not reasonably likely to affect
adversely Parent's or Merger Sub's ability to complete the
Merger; or
(h) by Parent or the Company if the shareholders of
the Company do not approve this Agreement at the Company
Shareholders' Meeting or any adjournment or postponement
thereof.
SECTION 8.02. Effect of Termination. In the event of
termination of this Agreement by either the Company or Parent as
provided in Section 8.01, this Agreement shall forthwith become
void and have no effect, without any liability or obligation on
the part of Parent, Merger Sub or the Company, other than the
provisions of Section 3.20, Section 4.13, the last sentence of
Sections 6.03(a) and (b), Section 6.09, this Section 8.02 and
Article IX, and except to the extent that such termination
results from the wilful and material breach by a party of any of
its representations, warranties, covenants or agreements set
forth in this Agreement.
SECTION 8.03. Amendment. This Agreement may be
amended by the parties at any time before or after any required
approval of this Agreement by the shareholders of the Company;
provided, however, that after any such approval, there shall not
be made any amendment that by law requires further approval by
such shareholders without the further approval of such
shareholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties.
SECTION 8.04. Extension; Waiver. At any time prior to
the Effective Time, the parties may (a) extend the time for the
performance of any of the obligations or other acts of the other
parties, (b) waive any inaccuracies in the representations and
warranties contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) subject to the
proviso of Section 8.03, waive compliance with any of the
agreements or conditions contained in this Agreement. Any
agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in any instrument in writing
signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Nonsurvival of Representations. None of
the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the
Effective Time. This Section 9.01 shall not limit any covenant
or agreement of the parties which by its terms contemplates
performance after the Effective Time.
SECTION 9.02. Notices. All notices, requests, claims,
demands and other communications under this Agreement shall be in
writing and shall be deemed given if delivered personally or sent
by overnight courier (providing proof of delivery) to the parties
at the following addresses (or at such address for a party as
shall be specified by like notice):
(a) if to Parent or Merger Sub, to:
International Paper Company
Two Manhattanville Road
Purchase, New York 10577
Attention: General Counsel
Facsimile No.: (914) 397-1612
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attention: Blaine V. Fogg, Esq.
Facsimile No.: (212) 735-2000
(b) if to the Company, to:
Federal Paper Board Company, Inc.
75 Chestnut Ridge Road
Montvale, New Jersey 07645
Attention: Executive Vice President
Facsimile No.: (201) 307-6132
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: John J. Madden, Esq.
Facsimile No.: (212) 848-7179
SECTION 9.03. Definitions. For purposes of this
Agreement:
(a) an "affiliate" of any person means another person
that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under
common control with, such first person;
(b) "control" (including the terms "controlled by" and
"under common control with") means the possession, directly
or indirectly, of the power to direct or cause the direction
of the management and policies of a person, whether through
the ownership of voting securities, by contract or
otherwise;
(c) "knowledge" or "known" means, with respect to the
matter in question, if any of the executive officers of the
Company or Parent, as the case may be, has actual knowledge
of such matter;
(d) "lien" means any encumbrance, hypothecation,
infringement, lien, mortgage, pledge, restriction, security
interest, title retention or other security arrangement, or
any adverse right or interest, charge or claim of any nature
whatsoever of, on, or with respect to any asset, property or
property interest; provided, however, that the term "lien"
shall not include (i) liens for water and sewer charges and
current taxes not yet due and payable or being contested in
good faith, (ii) mechanics', carriers', workers',
repairers', materialmen's, warehousemen's and other similar
liens arising or incurred in the ordinary course of business
or (iii) all liens approved in writing by the other party
hereto;
(e) "material adverse change" or "material adverse
effect" means, when used in connection with the Company or
Parent, any change or effect (or any development that,
insofar as can reasonably be foreseen, is likely to result
in any change or effect) that is materially adverse to the
business, financial condition or results of operations of
such party and its subsidiaries taken as a whole;
(f) "person" means an individual, corporation,
partnership, joint venture, association, trust,
unincorporated organization or other entity; and
(g) a "subsidiary" of any person means another person,
an amount of the voting securities, other voting ownership
or voting partnership interests of which is sufficient to
elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests,
50% or more of the equity interests of which) is owned
directly or indirectly by such first person.
SECTION 9.04. Interpretation. When a reference is
made in this Agreement to a Section, Exhibit or Schedule, such
reference shall be to a Section of, or an Exhibit or Schedule to,
this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall
be deemed to be followed by the words "without limitation".
SECTION 9.05. Counterparts. This Agreement may be
executed in one or more counterparts, all of which shall be
considered one and the same agreement and shall become effective
when one or more counterparts have been signed by each of the
parties and delivered to the other parties, it being understood
that all parties need not sign the same counterpart.
SECTION 9.06. Entire Agreement; No Third-Party
Beneficiaries. This Agreement constitutes the entire agreement,
and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject
matter of this Agreement (provided, however, that the provisions
of the Confidentiality Agreement shall remain valid and in
effect) and, except for the provisions of Article II and Sections
6.05, 6.06 and 6.07, is not intended to confer upon any person
other than the parties any rights or remedies hereunder.
SECTION 9.07. Assignment. Neither this Agreement nor
any of the rights, interests or obligations under this Agreement
shall be assigned, in whole or in part, by operation of law or
otherwise by any of the parties without the prior written consent
of the other parties, except that Merger Sub may assign, in its
sole discretion, any or all of its rights, interests and
obligations under this Agreement to Parent or to any direct or
indirect wholly owned subsidiary of Parent, but no such
assignment shall relieve Merger Sub of any of its obligations
under this Agreement. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and
assigns.
SECTION 9.08. Governing Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the
State of New York, without regard to any applicable conflicts of
law, except to the extent that the NCBCA shall be held to govern
the terms of the Merger.
SECTION 9.09. Enforcement. The parties agree that
irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this
Agreement in any court of the United States located in the State
of New York or in New York state court, this being in addition to
any other remedy to which they are entitled at law or in equity.
In addition, each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of any federal court located
in the State of New York or any New York state court in the event
any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement, (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court and (c)
agrees that it will not bring any action relating to this
Agreement or any of the transactions contemplated by this
Agreement in any court other than a federal or state court
sitting in the State of New York.
IN WITNESS WHEREOF, Parent, Merger Sub and the Company
have caused this Agreement to be signed by their respective
officers thereunto duly authorized, all as of the date first
written above.
INTERNATIONAL PAPER COMPANY
by /s/ James P. Melican
___________________________
Name: James P. Melican
Title: Executive Vice President
FOCUS MERGER CO., INC.
by /s/ James P. Melican
____________________________
Name: James P. Melican
Title: Executive Vice President
FEDERAL PAPER BOARD COMPANY, INC.
by /s/ Quentin J. Kennedy
_______________________________
Name: Quentin J. Kennedy
Title: Executive Vice President
EXHIBIT A
FORM OF AFFILIATE LETTER FOR
AFFILIATES OF THE COMPANY
[____________], 1996
International Paper Company
Two Manhattanville Road
Purchase, New York 10577
Ladies and Gentlemen:
I have been advised that as of the date of this letter
I may be deemed to be an "affiliate" of Federal Paper Board
Company, Inc., a North Carolina corporation (the "Company"), as
the term "affiliate" is defined for purposes of paragraphs (c)
and (d) of Rule 145 of the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the
"Act"). Pursuant to the terms of the Agreement and Plan of
Merger dated as of November 6, 1995 (the "Merger Agreement")
among International Paper Company, a New York corporation
("Parent"), Focus Merger Co., Inc., a North Carolina corporation
("Merger Sub"), and the Company, the Company will be merged with
and into Merger Sub (the "Merger"). Capitalized terms used in
this letter without definition shall have the meanings assigned
to them in the Merger Agreement.
As a result of the Merger, I may receive shares of
common stock, par value $1.00 per share, of Parent (the "Parent
Shares"). I would receive such Parent Shares in exchange for
shares (or upon exercise of options for shares) owned by me of
common stock, par value $5.00 per share, of the Company (the
"Company Shares").
1. I represent, warrant and covenant to Parent that in the
event I receive any Parent Shares as a result of the Merger:
A. I shall not make any sale, transfer or other
disposition of the Parent Shares in violation of the Act or the
Rules and Regulations.
B. I have carefully read this letter and the Merger
Agreement and discussed the requirements of such documents and
other applicable limitations upon my ability to sell, transfer or
otherwise dispose of the Parent Shares, to the extent I felt
necessary, with my counsel or counsel for the Company.
C. I have been advised that the issuance of the
Parent Shares to me pursuant to the Merger has been registered
with the Commission under the Act on a Registration Statement on
Form S-4. However, I have also been advised that, because at the
time the Merger is submitted for a vote of the shareholders of
the Company, (a) I may be deemed to be an affiliate of the
Company and (b) the distribution by me of the Parent Shares has
not been registered under the Act, I may not sell, transfer or
otherwise dispose of the Parent Shares issued to me in the Merger
unless (i) such sale, transfer or other disposition is made in
conformity with the volume and other limitations of Rule 145
promulgated by the Commission under the Act, (ii) such sale,
transfer or other disposition has been registered under the Act
or (iii) in the opinion of counsel reasonably acceptable to
Parent, such sale, transfer or other disposition is otherwise
exempt from registration under the Act.
D. I understand that Parent is under no obligation to
register the sale, transfer or other disposition of the Parent
Shares by me or on my behalf under the Act or, except as provided
in paragraph 2(A) below, to take any other action necessary in
order to make compliance with an exemption from such registration
available.
E. I understand that there will be placed on the
certificates for the Parent Shares issued to me, or any
substitutions therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED
IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER
THE SECURITIES ACT OF 1933 APPLIES. THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY ONLY BE TRANSFERRED
IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED
[____________], 1996 BETWEEN THE REGISTERED HOLDER
HEREOF AND INTERNATIONAL PAPER COMPANY, A COPY OF WHICH
AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF
INTERNATIONAL PAPER COMPANY."
F. I understand that unless a sale or transfer is
made in conformity with the provisions of Rule 145, or pursuant
to a registration statement, Parent reserves the right to put the
following legend on the certificates issued to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND
WERE ACQUIRED FROM A PERSON WHO RECEIVED SUCH SHARES IN
A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE
SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN
ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR
RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF
WITHIN THE MEANING OF THE SECURITIES ACT OF 1933 AND
MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT IN ACCORDANCE WITH AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933."
G. Execution of this letter should not be considered
an admission on my part that I am an "affiliate" of the Company
as described in the first paragraph of this letter, nor as a
waiver of any rights I may have to object to any claim that I am
such an affiliate on or after the date of this letter.
2. By Parent's acceptance of this letter, Parent hereby
agrees with me as follows:
A. For so long as and to the extent necessary to
permit me to sell the Parent Shares pursuant to Rule 145 and, to
the extent applicable, Rule 144 under the Act, Parent shall (a)
use its reasonable efforts to (i) file, on a timely basis, all
reports and data required to be filed with the Commission by it
pursuant to Section 13 of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and (ii) furnish to me upon request a
written statement as to whether Parent has complied with such
reporting requirements during the 12 months preceding any
proposed sale of the Parent Shares by me under Rule 145, and (b)
otherwise use its reasonable efforts to permit such sales
pursuant to Rule 145 and Rule 144. Parent hereby represents to
me that it has filed all reports required to be filed with the
Commission under Section 13 of the 1934 Act during the preceding
12 months.
B. It is understood and agreed that certificates with
the legends set forth in paragraphs E and F above will be
substituted by delivery of certificates without such legend if
(i) two years shall have elapsed from the date the undersigned
acquired the Parent Shares received in the Merger and the
provisions of Rule 145(d)(2) are then available to the
undersigned, (ii) three years shall have elapsed from the date
the undersigned acquired the Parent Shares received in the Merger
and the provisions of Rule 145(d)(3) are then applicable to the
undersigned, or (iii) Parent has received either an opinion of
counsel, which opinion and counsel shall be reasonably satisfactory
to Parent, or a "no action" letter obtained by the undersigned from
the staff of the Commission, to the effect that the restrictions
imposed by Rule 145 under the Act no longer apply to the undersigned.
Very truly yours,
Name:
Agreed and accepted this __day
of [____________], 1996, by
INTERNATIONAL PAPER COMPANY
By:
Name:
Title:
EXHIBIT B
FORM OF COMPANY TAX OPINION REPRESENTATION LETTER
____________, 1996
Shearman & Sterling
Citicorp Center
153 East 53rd Street
New York, NY 10022-4676
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
Dear Sirs:
On behalf of the Company, the undersigned, in connection
with the opinions to be delivered by your firms pursuant to
Sections 7.03(c) and 7.02(d) of the Agreement and Plan of Merger
dated as of November 6, 1995, among Parent, Merger Sub and the
Company,* hereby certifies that, to the extent the facts relate
to the Company to his knowledge and after due diligence, and to
the extent otherwise without knowledge to the contrary, the
descriptions of the facts contained in the Registration Statement
and the Proxy Statement completely and accurately describe the
Merger and the transactions leading up thereto and further that:
1. The fair market value of the Parent Common Stock and
other consideration received by each Company shareholder will be
approximately equal to the fair market value of the Company
Common Stock surrendered in the exchange.
2. There is no intercorporate indebtedness existing
between Parent and the Company or between Merger Sub and the
Company that was issued, acquired, or will be settled at a
discount.
3. The Company is not an investment company as defined in
section 368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code.
4. To the best knowledge of the management of the Company
there is no plan or intention on the part of the shareholders of
the Company on the date hereof to sell, exchange or otherwise
dispose of a number of shares of Parent Common Stock received in
the Merger that would reduce such Company shareholders' ownership
of Parent Common Stock to a number of shares having a value, as
of the date of the Merger, of less than 40 percent of the value
of all of the formerly outstanding Company Common Stock and
Convertible Preferred Stock as of the same date. For purposes of
this representation, shares of Convertible Preferred Stock
redeemed prior to the Merger and shares of Company Common Stock
exchanged for cash or other property in the Merger, surrendered
by dissenters or exchanged for cash in lieu of fractional shares
____________________
* For purposes of this certificate, capitalized terms used and
not otherwise defined herein shall have the meaning ascribed
thereto in the Agreement and Plan of Merger.
of Parent Common Stock will be treated as outstanding Company
stock on the date of the Merger. In addition, and not in
limitation of the foregoing, the Company has considered, in
making this representation, any shares of Company Common Stock
that have been sold, redeemed or otherwise disposed of by
shareholders who own 5 percent or more of the Company Common
Stock, or by shareholders who are officers or directors of the
Company, after the announcement of the Merger and prior to the
Effective Time to the extent the management of the Company has
knowledge on the date hereof of any such sales, redemptions or
dispositions. Except as set forth on Annex I to this letter, to
the knowledge of the management of the Company there are no
shareholders who own 5 percent or more of the Company Common
Stock on the date hereof.
5. At the Effective Time, Merger Sub will acquire at least
90 percent of the fair market value of the net assets and at
least 70 percent of the fair market value of the gross assets
held by the Company immediately prior to the Merger. For
purposes of this representation, amounts used by the Company to
pay its reorganization expenses and all redemptions, including
the redemption of the Convertible Preferred Stock prior to the
Merger, and distributions (except for regular, normal dividends)
made by the Company immediately preceding the transfer will be
included as assets of the Company held immediately prior to the
Merger.
6. The liabilities of the Company assumed by Merger Sub
and the liabilities to which the transferred assets of the
Company are subject were incurred by the Company in the ordinary
course of its business.
7. The fair market value of the assets of the Company
transferred to Merger Sub will equal or exceed the sum of the
liabilities assumed by Merger Sub, plus the amount of
liabilities, if any, to which the transferred assets are subject.
8. The Company is not under the jurisdiction of a court in
a Title 11 or similar case within the meaning of section
368(a)(3)(A) of the Internal Revenue Code.
9. None of the compensation received by any shareholder-
employees of the Company will be separate consideration for, or
allocable to, any of their shares of Company Common Stock.
10. The payment of cash in lieu of fractional shares of
Parent Common Stock is solely for the purpose of avoiding the
expense and inconvenience to Parent of issuing fractional shares
of Parent Common Stock and does not represent separately
bargained-for consideration.
I understand that Shearman & Sterling, as counsel for the
Company, and Skadden, Arps, Slate, Meagher & Flom, as counsel for
Parent, will rely on this certificate in rendering their
respective opinions concerning certain of the federal income tax
consequences of the Merger and hereby commit to inform them if,
for any reason, any of the foregoing representations ceases to be
true prior to the Effective Time.
FEDERAL PAPER BOARD
COMPANY, INC.
BY:______________________
Name:
Title:
Annex I
Beneficially Percent
Beneficial Owner* Owned Shares of Class
______________
* [Attach SEC filings]
EXHIBIT C
FORM OF PARENT TAX OPINION REPRESENTATION LETTER
__________, 1996
Shearman & Sterling
Citicorp Center
153 East 53rd Street
New York, NY 10022-4676
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
Dear Sirs:
On behalf of Parent and Merger Sub, the undersigned, in
connection with the opinions to be delivered by your firms
pursuant to Sections 7.03(c) and 7.02(d) of the Agreement and
Plan of Merger dated as of November 6, 1995, among Parent, Merger
Sub and the Company,* hereby certifies that, to the extent the
facts relate to Parent and Merger Sub to his knowledge and after
due diligence, and to the extent otherwise without knowledge to
the contrary, the descriptions of the facts contained in the
Registration Statement and the Proxy Statement completely and
accurately describe the Merger and the transactions leading up
thereto and further that:
_________________
* For purposes of this certificate, capitalized terms used and
not otherwise defined herein shall have the meaning ascribed
thereto in the Agreement and Plan of Merger.
1. The fair market value of the Parent Common Stock and
other consideration received by each Company shareholder will be
approximately equal to the fair market value of the Company
Common Stock surrendered in the exchange.
2. There is no intercorporate indebtedness existing
between Parent and the Company or between Merger Sub and the
Company that was issued, acquired, or will be settled at a
discount.
3. Neither Parent nor Merger Sub is an investment company
as defined in section 368(a)(2)(F)(iii) and (iv) of the Internal
Revenue Code.
4. At the Effective Time, Merger Sub will acquire at least
90 percent of the fair market value of the net assets and at
least 70 percent of the fair market value of the gross assets
held by the Company immediately prior to the Merger. For
purposes of this representation, amounts paid by the Company to
dissenters, amounts paid by the Company to shareholders who
receive cash or other property, assets of the Company used to pay
reorganization expenses, and all redemptions, including the
redemption of the Convertible Preferred Stock prior to the
Merger, and distributions (except for regular, normal dividends)
made by the Company immediately before the Merger will be
included as assets held by the Company immediately prior to the
Merger.
5. Prior to the Merger, Parent will be in control of
Merger Sub within the meaning of the section 368(c) of the
Internal Revenue Code.
6. Parent has no plan or intention to redeem or otherwise
acquire after the date of the Merger any of the Parent Common
Stock to be issued in the Merger.
7. Parent has no plan or intention to liquidate Merger
Sub; to merge Merger Sub with and into another corporation; to
sell or otherwise dispose of any of the stock of Merger Sub; or
to cause Merger Sub to sell or otherwise dispose of any of the
assets of the Company acquired in the Merger, except for
dispositions made in the ordinary course of business, or
transfers described in section 368(a)(2)(C) of the Internal
Revenue Code.
8. Following the Merger, Merger Sub will continue the
historic business of the Company or use a significant portion of
the Company's business assets in a business.
9. Following the Merger, Merger Sub will not issue
additional shares of its stock that would result in Parent losing
control of Merger Sub within the meaning of section 368(c) of the
Internal Revenue Code.
10. No stock of Merger Sub will be issued in the Merger.
11. The payment of cash in lieu of fractional shares of
Parent Common Stock is solely for the purpose of avoiding the
expense and inconvenience to Parent of issuing fractional shares
of Parent Common Stock and does not represent separately
bargained-for consideration.
12. None of the compensation received by any shareholder-
employees of the Company will be separate consideration for, or
allocable to, any of their shares of Company Common Stock.
I understand that Shearman & Sterling, as counsel for the
Company, and Skadden, Arps, Slate, Meagher & Flom, as counsel for
Parent, will rely on this certificate in rendering their opinion
concerning certain of the federal income tax consequences of the
Merger and hereby commit to inform them if, for any reason, any
of the foregoing representations ceases to be true prior to the
Effective Time.
INTERNATIONAL PAPER
COMPANY
BY: _____________________
Name:
Title:
INTERNATIONAL PAPER
2 MANHATTANVILLE ROAD
PURCHASE, NY 10577-2196
News Release
IP Media IP Analyst Federal Paper
Contacts: Contacts: Board Contact:
Carl Gagliardi Carol Tutundgy Quentin J.
(914) 397-1666 (914) 397-1632 Kennedy
Molly Sullivan Maryanne Rupy 201-391-1776
(914) 397-1652 (914) 397-1626
Brian Turcotte
(914) 397-1623
INTERNATIONAL PAPER, FEDERAL PAPER BOARD ANNOUNCE MERGER
NOVEMBER 6, 1995
PURCHASE, N.Y. -- International Paper and Federal Paper
Board announced today that they have agreed to merge.
Once the merger is complete, Federal Paper Board, a
diversified forest products company with $1.57 billion in
1994 net sales, will become a wholly owned subsidiary of
International Paper. The transaction, which is valued at
$3.5 billion, including assumption of debt, is subject to
approval by Federal Paper Board's shareholders, as well
as by regulatory authorities. It is expected to close in
the first quarter of next year.
In the merger, Federal Paper Board's shareholders will be
entitled to receive at their election, either $55 in cash
per share or $55 worth of International Paper common
stock per share, subject to the limitation that not more
than 1.612 and not less than 1.275 International Paper
shares will be issued for each Federal Paper Board share
exchanged for International Paper stock. The shareholder
election to receive cash or International Paper stock
will be subject to adjustment so that, in the aggregate,
approximately 49 percent of the Federal Paper Board
shares will be exchanged for cash. The merger is
intended to qualify as a tax-free reorganization.
"This is a wonderful opportunity to combine two
first-class organizations in a way that will strengthen
both," said John R. Kennedy, Federal Paper Board's
president and chief executive officer. "Our
complementary businesses will provide an opportunity to
better serve a broader range of customers. The
combination of cash and International Paper stock is an
excellent value for our shareholders."
"Merging with this outstanding forest products
company will help us enhance our position as one of the
industry's most efficient producers," said John A.
Georges, chairman and chief executive officer of
International Paper. "With Federal Paper Board, we gain
two world-class facilities in its Riegelwood, N.C., and
Augusta, Ga., mills."
Over the last six years, Federal Paper Board has
invested over $1.7 billion in upgrades and process
improvements to these and other facilities. Along with
the two mills comes over a half million acres of valuable
and mature plantation timberland close to their
facilities. Federal Paper Board's Tait facility in
Scotland is an important supplier of uncoated free sheet
in the United Kingdom and will be a significant addition
to International Paper's existing product lines in
Europe.
"We are pleased to welcome Jack Kennedy to our
board," said Mr. Georges, "and we are looking forward to
having the Federal Paper Board employees become part of
the International Paper family."
International Paper, headquartered in Purchase,
N.Y., is a worldwide producer of printing papers,
packaging and forest products. The company also operates
specialty businesses and a broadly based paper
distribution network. International Paper has
manufacturing operations in 28 countries and exports its
products to more than 130 nations.
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